finance, administration and audit committee agenda

CITY OF VAUGHANFINANCE, ADMINISTRATION AND AUDIT COMMITTEE

AGENDA

Monday, May 6, 20199:30 a.m.Committee Rooms 242/2432nd Floor, Vaughan City Hall2141 Major Mackenzie DriveVaughan, Ontario

Pages

1. CONFIRMATION OF AGENDA

2. DISCLOSURE OF INTEREST

3. COMMUNICATIONS

4. DETERMINATION OF ITEMS REQUIRING SEPARATE DISCUSSIONINCLUDING MEMBERS RESOLUTION(S)

1. INTERNAL AUDIT REPORT - 2018 ANNUAL REPORT 3Report of the Director of Internal Audit with respect to the above.

2. MASTER FIRE PLAN 2018-2028 IMPLEMENTATION STRATEGY 45Report of the Deputy City Manager, Community Services with respect tothe above.

3. BUILDING PERMIT FEES ANNUAL FINANCIAL REPORT 2018 49Report of the Deputy City Manager, Planning and Growth Managementwith respect to the above.

4. FISCAL HEALTH REPORT – FOR THE YEAR ENDING DECEMBER 31,2018

53

Report of the Chief Financial Officer and City Treasurer with respect tothe above.

5. SHORT-TERM RENTAL REGULATION 83Report of the Deputy City Manager, Community Services with respect tothe above.

6. THE LONG-TERM WATER FINANCIAL PLAN, 2020-2031 AS PART OFTHE MUNICIPAL DRINKING WATER LICENCE RENEWAL

106

Report of the Interim Deputy City Manager, Public Works and the ChiefFinancial Officer and City Treasurer with respect to the above.

7. SUMMARY OF LEASE AND LICENCE AGREEMENTS OPERATING INCITY OWNED FACILITIES

129

Report of the Deputy City Manager, Community Services with respect tothe above.

8. CAPITAL BUDGET AMENDMENT FOR FL-5411-18 - REPLACEMENTFORESTRY BUCKET TRUCK WITH CHIPPER BODY; AND, FL-5215-19 - PKS-ADDITIONAL 2 TON 4X4 CREW CAB DUMP TRUCK

136

Report of the Interim Deputy City Manager, Public Works with respect tothe above.

9. MAYOR MAURIZIO BEVILACQUA’S 2018-2022 TERM OF COUNCILPRIORITY TASK FORCES

141

Resolution of Mayor Maurizio Bevilacqua with respect to the above.

10. COUNCIL STAFF RELATIONS POLICY 143Report of the Deputy City Manager, Corporate Services with respect tothe above.

5. ADOPTION OF ITEMS NOT REQUIRING SEPARATE DISCUSSION

6. CONSIDERATION OF ITEMS REQUIRING SEPARATE DISCUSSION

7. PRESENTATIONS AND DEPUTATIONS

8. CONSIDERATION OF STATUTORY/AD HOC COMMITTEE REPORTS

9. NEW BUSINESS

10. CLOSED SESSION RESOLUTION FOR COMMITTEE OF THE WHOLE(CLOSED SESSION)

11. ADJOURNMENT

ALL APPENDICES ARE AVAILABLE FROM THE CITY CLERK'S OFFICEPLEASE NOTE THAT THIS MEETING WILL BE AUDIO RECORDED

AND VIDEO BROADCAST

www.vaughan.ca (Agendas, Minutes and Live Council Broadcast)

http://www.vaughan.ca/council/minutes_agendas/council_broadcast/Pages/default.aspx

Finance, Administration and Audit Committee Report

DATE: Monday, May 06, 2019 WARD(S): ALL

TITLE: INTERNAL AUDIT REPORT – 2018 ANNUAL REPORT

FROM: Kevin Shapiro, Director of Internal Audit

ACTION: FOR INFORMATION

Purpose This report outlines the activities of the Internal Audit Department for the period January

1 through December 31, 2018. It is not a report on the results of the audits conducted,

as this information is presented separately throughout the year.

Recommendations 1. That the attached report, Internal Audit Department 2018 Annual Report be

received.

Report Highlights • The Internal Audit Department provides independent, objective assurance and

consulting activity designed to add value and improve the City’s operations.

• Internal Audit helps the City accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

• Internal Audit’s functional reporting relationship to Council through FA&A helps ensure that the department is free to work independently and objectively.

• The Internal Audit Department continues to be able to carry out its activities free from interference and remains organizationally independent.

• Any threats to the Internal Audit Department’s independence or objectivity, whether perceived or actual, will be managed at the individual auditor, engagement, functional, and organizational levels, and be brought to the attention of Council should it occur.

Background

In accordance with the City’s Internal Audit Policy, an annual report shall be submitted to the Finance, Administration and Audit Committee outlining the annual activities of the Internal Audit Department.

Previous Reports/Authority

Not applicable.

Analysis and Options

The report covers several topics, including:

• An overview of the Internal Audit Department’s purpose, governance structure and organizational interrelationships.

• An update on the Department’s status as it relates to completing the projects on the 2015 – 2018 Internal Audit Risk Based Work Plan, staffing, meeting deliverables and performance management.

• An analysis of common themes and issues from prior audit reports.

• The annual update on the status of completed and outstanding management action plans to address audit report recommendations.

• The Anonymous Reporting System annual update, including a summary of the issues raised, trend analysis and performance comparison against the NAVEX Global Benchmark.

Financial Impact

There are no direct economic impacts associated with this report.

Broader Regional Impacts/Considerations

Not applicable.

Conclusion

The Internal Audit Department continues to be able to carry out its activities free from interference and remains organizationally independent. Any threats to the Internal Audit Department’s independence or objectivity, whether perceived or actual, will be managed at the individual auditor, engagement, functional, and organizational levels, and be brought to the attention of Council should it occur.

In 2019, Internal Audit will conduct the scheduled engagements as per the Council approved Internal Audit Risk Based Work Plan, which provides a combination of risk and control advice and assurance designed to add value and improve the City’s operations. For more information, please contact: Kevin Shapiro, Director of Internal Audit, ext. 8293

Attachments

1. Internal Audit Report – 2018 Annual Report

Prepared by

Kevin Shapiro, Director of Internal Audit, ext. 8293

Attachment 1

INTERNAL AUDIT

Annual Report:

January 2018 – December 2018

April 2019

INTERNAL AUDIT REPORT

2018 ANNUAL REPORT

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TABLE OF CONTENTS

Purpose of Internal Audit ............................................................................................................................................................ 3

Internal Audit – Governance Structure ............................................................................................................................................................ 3

Functional Reporting Relationship ....................................................................................................................................................... 3

Administrative Reporting Relationship ....................................................................................................................................................... 4

Internal Audit Policy ....................................................................................................................................................... 5

Annual Declaration of Organizational Independence ....................................................................................................................................................... 5

Three Lines of Defense Model ....................................................................................................................................................... 6

Governance Interrelationships ....................................................................................................................................................... 7

Role and Expected Outcome of a Full Service Internal Audit Function ............................................................................................................................................................ 8

Measuring Performance ............................................................................................................................................................ 9

Service to Stakeholders ................................................................................................................................................ 10

Technical Development ................................................................................................................................................ 14

Staff Development ................................................................................................................................................ 15

Common Themes and Issues – Analysis of 2018 Internal Audit Reports ........................................................................................................................................................... 16


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Anonymous Reporting System – Annual Update .......................................................................................................................................................... 17

Background and Purpose ...................................................................................................................................................... 17

Performance Criteria ...................................................................................................................................................... 17

Report Volume per 100 Employees ................................................................................................................................................ 18

Report Allegation Categories and Substantiation Rates ................................................................................................................................................ 18

Reporter Follow-up Rate ................................................................................................................................................ 19

Anonymous vs Named Reporters ................................................................................................................................................ 19

Case Closure Time ................................................................................................................................................ 20

Status of Management Action Plans – Annual Update ........................................................................................................................................................... 21

2015 – 2018 Internal Audit Work Plan Status and Schedule ........................................................................................................................................................... 29

Audit Client Survey Results ............................................................................................................................................. Appendix A

List of Completed Audit Projects and Status of MAPs ............................................................................................................................................. Appendix B


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PURPOSE OF INTERNAL AUDIT

The Internal Audit Department provides independent, objective assurance and consulting activity designed to add value and improve the City’s operations. The Department helps the City accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes. The department’s core responsibilities are to conduct risk based operational and compliance audits and provide advisory services where requested. The Internal Audit Department’s activities support the City’s Term of Council Service Excellence Strategy of “Good Governance”.

INTERNAL AUDIT – GOVERNANCE STRUCTURE Internal Audit reports functionally to Council through the Finance, Administration and Audit Committee (FA&A) of Council and administratively to the City Manager. According to the Institute of Internal Auditors (IIA) International Standards for the Professional Practice of Internal Audit (Attribute Standards 1110 - Organizational Independence), the chief audit executive must report to a level within the organization that allows the internal audit activity to fulfill its responsibilities. Appropriate reporting lines are critical to achieve the independence, objectivity, and organizational stature for an internal audit function necessary to effectively fulfill its obligations. Reporting lines are also critical to ensuring the appropriate flow of information and access to key executives and managers. Functional Reporting Relationship:

The functional reporting relationship to Council through FA&A helps ensure that the Internal Audit Department is free to work independently and objectively, and is ultimately responsible for ensuring that Internal Audit has the resources and access to information to enable it to fulfil its mandate. These functional responsibilities include:

• Approving the Internal Audit Charter and Internal Audit Risk Based Work Plan.

• Ensuring that Internal Audit is appropriately resourced, and has sufficient authority and standing to carry out its tasks effectively.

• Making appropriate inquiries of management and the Director of Internal Audit to determine whether there are inappropriate scope or resource limitations.

• Ensuring that the Director of Internal Audit has direct access to the FA&A Chair and FA&A committee members, and is accountable to the Committee.

• Receiving communications from the Director of Internal Audit on the Department’s activities relative to its risk based work plan and other related matters.

• Reviewing and monitoring management’s responsiveness to audit findings and recommendations.


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• Monitoring and assessing the quality and effectiveness of Internal Audit, and its role in the overall context of the City’s governance framework.

• Approving decisions regarding the appointment and removal of the Director of Internal Audit.

• Approving the compensation of the Director of Internal Audit.

The Director of Internal Audit assists Council in fulfilling their functional responsibilities by:

• Reviewing the Internal Audit governance structure and attesting to the Department’s

organizational independence on an annual basis.

• Providing feedback on the sufficiency of internal audit resources through the Term of

Council Risk Based Work Plan and through participation in the City’s annual budgeting

process.

• Providing briefing sessions to the Mayor and Members of Council on emerging risks.

• Presenting reports related to the Department’s activities through FA&A.

• Providing an annual update on the status of all outstanding management action plans so

that Council can review and monitor management’s responsiveness.

• Providing an annual update on the effectiveness of the City’s Anonymous Reporting

System.

• Reporting annually on the Department’s performance. This information can be used by Council to gauge the quality, efficiency and effectiveness of the Internal Audit Department and the Director of Internal Audit.

Administrative Reporting Relationship: The administrative reporting relationship to the City Manager helps facilitate the day-to-day operations of the Internal Audit Department. This includes:

• Providing appropriate office space, supplies and equipment.

• Human Resources, Information Technology, and Purchasing support.

• Internal communications and information flow.

• Administration of the Internal Audit activity’s policies and procedures.


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Internal Audit Policy:

The Internal Audit Charter was developed and approved by FA&A on October 2012. The Charter was revised and renamed the Internal Audit Policy, and approved by Council in June 2014. The Internal Audit Policy is a formal document that defines the Internal Audit Department’s purpose, authority, and responsibility. It establishes the Internal Audit Department’s position within the City, including the nature of the functional reporting relationship with Council; authorizes access to records, personnel, and physical properties relevant to the performance of engagements; and defines the scope of internal audit activities. The policy requires that it be reviewed at least once a year to ensure that it is up-to-date and effective. Based on the review Internal Audit conducted in December 2017 and December 2018, the policy remains effective. However, it should be updated to reflect Internal Audit’s role with respect to administration of the City’s Anonymous Reporting System. A revised Internal Audit Policy will be brought forward to a future FA&A meeting for consideration and approval.

Annual Declaration of Organizational Independence: According to both the City’s Internal Audit Policy and IIA Attribute Standards 1110 - Organizational Independence, the Director of Internal Audit must confirm to FA&A at least annually, the organizational independence of the internal audit activity. In addition, IIA standard 1110.A1 states that the “internal audit activity must be free from interference in determining the scope of internal auditing, performing work, and communicating results. The chief audit executive must disclose such interference to the board and discuss the implications.”

This statement confirms that the Internal Audit Department has been able to carry out its activities free from management interference and remains organizationally independent. Any threats to the Internal Audit Department’s independence or objectivity, whether perceived or actual, will be managed at the individual auditor, engagement, functional, and organizational levels, and be brought to the attention of the FA&A Committee should it occur.


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Three Lines of Defense Model:

The IIA’s Three Lines of Defense model helps illustrate the interrelationships of organizational risk and control. The Model distinguishes among three groups (or lines) involved in effective risk management:

• Functions that own and manage risks.

• Functions that oversee risks.

• Functions that provide independent assurance.

According to the model, Council is responsible for providing direction to management with respect to the City’s risk appetite. Council would delegate to the City Manager primary ownership, accountability, and responsibility for operational risk management and control. It is management’s responsibility to provide direction to staff with respect to risk management and ensure that the City’s activities are in line with the City’s overall risk appetite. Under the first line of defense, management would have ownership, responsibility and accountability for directly assessing, controlling and mitigating risks. The second line of defense consists of activities covered by several components of internal governance. This line of defense monitors and facilitates the implementation of effective risk management practices by assisting management in reporting adequate risk related information up and down the organization. Internal audit forms the City’s third line of defense. Through a risk-based approach, Internal Audit provides assurance on how effectively the City assesses and manages its risks and the efficiency and effectiveness of the first and second lines of defense. Internal Audit is also well-placed and equipped to fulfil an advisory role on the coordination of assurance, effective


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ways of improving existing processes, and assisting management in implementing recommended improvements. Governance Interrelationships:

The diagram below provides a high-level overview of the roles, responsibilities and the interrelationships of City Council, the Finance, Administration and Audit Committee, Management, the Internal Audit Function and the External Auditor. Each group, both individually and collectively supports the City in effectively meeting its goals while providing assurance that City operations are being managed under the principles of good governance, effective risk management, relevant and value-added controls and cost effectiveness.


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ROLE AND EXPECTED OUTCOME OF A FULL SERVICE INTERNAL AUDIT FUNCTION The following are the expected outcomes for a well-functioning internal audit function:

• Providing assurance that key risks that could harm the City are effectively managed.

• Providing assurance that key controls function as intended and support value to the City.

• Providing advice to City departments to help them develop risk mitigation strategies to better serve the public in service delivery.

• Providing education to support other departments in establishing and maintaining good governance, accountability and control.

• Supporting the City in its objective to maintain transparency and openness. Internal Audit achieves these outcomes through two primary roles: 1. Stewardship Role – These are engagements and projects designed to provide

reasonable assurance, through review of existing operations and processes, that the City is managing resources effectively and efficiently, is in compliance with policies and legislation and that controls are properly functioning as intended.

2. Agent of Change Role – This role is proactive and forward thinking consisting of engagements and projects that focus on strategic and operational risk and control. These are primarily advisory assignments that offer a better opportunity to serve the changing needs of the City and help support better management of organizational risk.


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MEASURING PERFORMANCE

The following table outlines the Internal Audit Efficiency and Effectiveness Performance Metrics:

Performance Measurement Category

Measures of Efficiency

Measures of Effectiveness

Measures of Efficiency and Effectiveness

Service to Stakeholders

• Number of internal audit reports issued vs. planned engagements (100% initiation rate) • Anonymous Reporting System annual median case closure time (equal to or less than the NAVEX Global median average) • Average actual hours vs. budgeted hours, by project (target within 10%)

• Percentage of audit recommendations accepted by management (100% target) • Review of Internal Audit governance structure (annual) • Acknowledgement of organizational independence (annual) • Successfully passing the Institute of Internal Auditors Quality Assurance and Improvement Program External Assessment (every 5 years)

• Client survey scores (positive average result) • Corporate management team survey scores (positive average result) • FA&A committee survey scores (positive average result)

Technical Development

• Number of hours spent in industry or other specialized training (minimum of 40 hours for Certified Internal Auditors and 20 hours for Certified Fraud Examiners) • Percent of auditors involved in professional organizations (100% target).

Staff Development

• Tracking of development plan (plan vs. actual, on an annual basis)

• Percentage of auditors with professional certifications (100% target)


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Internal Audit should effectively demonstrate its value as a key component of the City’s governance framework and lead by example with strong, relevant and reliable performance measures. To maintain and enhance Internal Audit’s credibility, its effectiveness and efficiency should be evaluated. Both qualitative and quantitative metrics are important in demonstrating Internal Audit’s performance. Quantitative performance metrics are often based on existing or obtainable data and are easily understood. They often require less effort to collect and are readily comparable, year over year. Qualitative metrics are often based on the collection of unique information through more time intensive methods such as survey research or interviews. They offer a broad view of performance on a range of topics that can provide depth to quantitative metrics. Service to Stakeholders:

There are ten metrics under the Service to Stakeholders Performance Measurement category. Three of them are efficiency measures, four are effectiveness measures and three measures both efficiency and effectiveness. Number of Internal Audit Reports Issued vs. Planned Engagements (100% Initiation Rate)

The Term of Council Internal Audit Risk Based Work Plan for 2015 to 2018 was developed using a risk assessment process that combined financial, reputational, compliance and operational criteria. Sources for determining risk and plan priorities included discussions with senior management, insight from Council, financial significance, current and emerging risks in the local government sector, high profile issues in other municipalities, staff requests, themes from previous audits and investigations and significant change initiatives. Based on current staffing levels, the Risk Based Work Plan will typically include between six and ten projects a year. As internal auditing is a year-round activity, it is to be expected that some projects starting in the latter half of the year will extend into the next calendar year. However, it is expected that all projects will commence in the year that they are scheduled. In 2018, six of the seven (86%) scheduled engagements were initiated. The time allocated to perform the Corporate Security Audit had to be repurposed to accommodate the additional resources required to finish the Water, Wastewater and Stormwater Audit. An update on the Water, Wastewater and Stormwater Audit was provided at the September 17, 2018 Committee of the Whole Closed Session. Based on the resource constrains and in consultation with the Deputy City Manager (DCM) of Community Services, the decision was made to cancel the Corporate Security Audit. According to the DCM of Community Services, staff have engaged the services of a consultant to commence work on developing a Corporate Security Strategy & Implementation


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Plan. The scope for the Security Strategy is to provide direction and guidance for a security framework reflecting perspectives from across the City using a strategic approach. A total of seven reports were completed, presented and approved by Council in 2018. There are five projects remaining from the 2015-2018 Work Plan that will be presented for approval in 2019. These include the Legal Services Audit (presented at FA&A on March 4 and approved by Council on March 19, 2019), Water, Wastewater and Stormwater Audit (scheduled to be presented to FA&A on June 5, 2019), Consulting and Professional Services Audit (scheduled to be presented to FA&A on October 7, 2019), and Facility Maintenance Services Audit (Q4). The Construction Audit of Fire Station #7-4 will encompass the complete lifecycle of the project. It is anticipated that audit reports will be issued after the completion of the Planning and Design, and Bid and Procurement Phases, Construction Phase and the Close Out Phase. The timing of these reports is dependent on the actual construction project timing. The audit of the Planning and Design and Bid and Procurement Phases was presented to FA&A on June 6 and approved by Council on June 19, 2018. The audit of the Construction Phase is estimated to be completed in Q4. Internal Audit’s role in advisory/consulting engagements is typically reported on by the process owner who engaged the service. In 2018, Internal Audit provided Project Risk Management Training sessions as part of the Corporate Project Management Office’s Project Management Training Program. Internal Audit also supported the City Manager’s Office by providing risk-based consulting services as it relates to the development and implementation of the City’s Service Excellence Strategic Initiatives. Anonymous Reporting System Annual Median Case Closure Time (Equal to or Less than the NAVEX Global Median Average)

Since the system was launched, there have been significant year over year improvements in the ability to address reporter’s concerns in a timely manner. In 2018, reports were investigated and closed 28.5 days faster than the Global Benchmark. The ability to investigate and close cases in a timely fashion helps foster a culture where concerns are taken seriously and builds organizational trust in the system. Actual Hours vs. Budgeted Hours, by Project (within 10% variance)

Budgeted project hours are based on best estimates and reflect historical experience. Risk based Internal Audits require significant client participation to identify risks, agree on issues and develop relevant and feasible management action plans. Internal Audit has a time docketing process that effectively tracks engagement hours by project, by activity type. In 2018, the average budgeted time allocated to a project was 477 hours. Actual average time allocated to a project was 483 hours, a difference of 1.26%. Percentage of Audit Recommendations Accepted by Management (100% Target)

This metric helps demonstrate the collaborative nature of a risk based internal audit. Internal audit engagements can be deemed successful when management participates in the process,


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concurs with the observations and recommendations, and is committed to addressing them through management action plans. In 2018, Internal Audit achieved a 100% acceptance rate for all audit recommendations. Review of Internal Audit Governance Structure and Acknowledgement of Organizational Independence (Annual)

Ensuring that the Internal Audit Department can perform its duties independently is vital to the effectiveness of the function. Further information on this topic can be found on pages 3 – 8 of this report. Successfully Passing the Institute of Internal Auditors Quality Assurance and Improvement Program External Assessment (Every 5 Years)

Internal Audit conforms to the International Standard for the Professional Practice of Internal Auditing and the Code of Ethics adopted by the IIA, as well as the City’s Code of Conduct and the Internal Audit Procedure Manual. As part of conformance, the Director of Internal Audit is responsible for developing and maintaining a quality assurance and improvement program that covers all aspects of the internal audit activity. It is designed to enable an evaluation of the internal audit activity’s conformance with the IIA Standards and an evaluation of whether internal auditors apply the Code of Ethics. The program also assesses the efficiency and effectiveness of the internal audit activity and identifies opportunities for improvement. The quality assurance and improvement program must include both internal and external assessments. Internal assessments are conducted by the Director of Internal Audit and are an integral part of the day-to-day supervision, review, and measurement of the internal audit activity. Ongoing monitoring is incorporated into the routine policies and practices used to manage the internal audit activity and uses processes, tools, and information considered necessary to evaluate conformance with the Code of Ethics and the Standards. External assessments must be conducted at least once every five years by a qualified, independent assessor or assessment team from outside the organization. External assessments may be accomplished through a full external assessment, or a self-assessment with independent external validation. The external assessor must conclude as to conformance with the Code of Ethics and the Standards; the external assessment may also include operational or strategic comments. Over the past two years, Internal Audit has been performing an internal readiness assessment to prepare for the City’s first external assessment, which we expect to perform in 2021. The following outline the internal readiness assessment activities conducted to date:

• Developed standard tools, templates and a quality assurance checklist to conduct the assessment.


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• Updated and revised the department’s standards and practices manual to reflect changes in the IIA’s IPPF framework.

• Starting with the Social Media Audit in 2017, all completed audits have been assessed using the quality assurance checklist and are in conformance with the International Standards for the Professional Practice of Internal Auditing.

• The Annual Review Checklists for 2017 and 2018 have been complete, and Internal Audit is in conformance with the Definition of Internal Auditing, the Code of Ethics and the Standards.

The following outline the internal readiness assessment activities that are still outstanding:

• Developing and implementing a formal Audit Committee Charter that sets out the authority of the FA&A committee with respect to audit related matters. A proposed Audit Committee Charter will be brought forward to a future FA&A meeting for consideration and approval.

• Updating the City’s Audit Policy to reflect Internal Audit’s role with respect to administration of the City’s Anonymous Reporting System. A revised Internal Audit Policy will be brought forward to a future FA&A meeting for consideration and approval.

Client, Corporate Management and FA&A Committee Survey Scores (Positive Average Result) Surveys are an important tool that can be used to assess proficiency in certain skills, competencies, or knowledge exhibited by the Internal Audit Department staff. Survey feedback is an important element of our Quality Assurance and Improvement Program and helps measure satisfaction with the quality of services delivered and identify potential opportunities for improvement. After the completion of each audit project, members of the management team directly involved in the audit process are asked to complete an Audit Client Survey. The 15-question survey asks for feedback on our performance and to identify areas where we can improve our operations. The survey focuses on how well we communicated throughout the audit, our understanding of the client’s issues, the professionalism of our audit staff, and the quality of our findings. The survey results help Internal Audit determine whether the goals and objectives of the audit were met and measure client satisfaction with the quality of services delivered. Internal Audit distributed a total of eight audit client surveys for the three completed 2018 audits and received responses from all eight respondents. Out of the 15 questions, 14 received 100% positive scores, while the remaining question received an 88% score. This is a very strong indicator that Internal Audit is effectively delivering value added services to the organization. The detailed results of this survey are summarized in Appendix A, which can be found at the end of the report.


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Due to the significant turnover of staff on the Corporate Management team and the 2018 municipal elections, Internal Audit did not administer the Corporate Management team and the FA&A Committee member annual surveys. Both surveys will be administered again in 2019. Technical Development:

There are two effectiveness metrics under the Technical Development Performance Measurement category. Number of Hours Spent in Industry or Other Specialized Training (Minimum of 40 Hours for Certified Internal Auditors and 20 hours for Certified Fraud Examiners)

Currently, Internal Audit staff possess one or more of the following professional certifications:

• Certified Internal Auditor (CIA)

• Certification in Risk Management Assurance (CRMA)

• Certified Fraud Examiner (CFE)

• Chartered Professional Accountant (CPA)

The IIA oversees several well-respected auditing certifications including the CIA designation. The CIA designation is the only globally accepted certification for internal auditors and remains the standard by which individuals demonstrate their professionalism in the internal audit field. The CRMA is designed for internal auditors and risk management professionals with responsibility for and experience in providing risk assurance, governance processes, quality assurance, or control self-assessment. It demonstrates an individual’s ability to evaluate the dynamic components that comprise an organization’s governance and enterprise risk management program and provide advice and assurance around these issues. Individuals who have achieved the CIA and/or any other IIA designation are required to complete a minimum of 40 hours of Continuing Professional Education (CPE) every year. Of these 40 hours, 2 must relate directly to ethics. The CFE credential denotes proven expertise in fraud prevention, detection and deterrence. CFEs are trained to identify the warning signs and red flags that indicate evidence of fraud and fraud risk. CFEs around the world help protect the global economy by uncovering fraud and implementing processes to prevent fraud from occurring in the first place. On an annual basis, CFE’s must obtain a minimum of 20 credit hours of CPE; at least 10 of these must relate directly to the detection and deterrence of fraud and 2 must relate directly to ethics. The CPA designation was created by the unification of Canada’s three independent legacy accounting professions (CA, CGA and CMA) into the CPA, now Canada’s only business and accounting profession. Working in collaboration with its provincial member organizations, the CPA supports the setting of accounting, auditing and assurance standards for business, not-for-profit organizations and government, and develops and delivers education programs. It also provides a range of member services and professional literature; undertakes research and development of intellectual property; issues guidance on risk management and governance; and fosters relationships with key stakeholders nationally and internationally.


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CPA and its provincial member organizations mandate is to protect the public interest by setting and enforcing the highest professional and ethical standards, to ensure that members are recognized as Canada’s preferred financial leaders and advisors, and to support its members in their efforts to enhance their capabilities. CPA’s are required to complete a minimum of 20 hours of Continuing Professional Development (CPD) a year. The CIA CPE requirements fulfil the CPA CPD requirements. Percent of Auditors Involved in Professional Organizations (100% Target)

In addition to the professional organizations mentioned above, all members of the City of Vaughan’s Internal Audit Department are members of the Municipal Internal Auditors Association (MIAA). The purpose of MIAA is to provide a professional forum for the purposes of networking, continuing education and exchanging ideas and best practices with other municipal internal auditors. MIAA hosts educational events twice a year. The completion of the yearly CPE requirements and maintaining active membership in the associated professional organizations helps ensure that the City’s Internal Audit Department staff remain up to date on the latest municipal, business, auditing, risk management, fraud prevention and detection techniques and trends. In 2018, all Internal Audit staff met their respective CPE/CPD requirements and all members are in good standing with their respective professional organizations. Staff Development:

There are two metrics under the Staff Development Performance Measurement category. One is an efficiency measures and one is an effectiveness measure. Tracking of Development Plan (Plan vs Actual, Annual Basis) The Director of Internal Audit is responsible for evaluating staff performance on an annual basis, using the City’s existing Talent Management Program. The City’s Talent Management System integrates employee goals, competencies, performance feedback, appraisal, and learning and development. It provides integrated and timely information, feedback, communication and reporting. Through the performance planning and evaluation process, Internal Audit aligns work activities to the Department’s Risk Based Work Plan while developing and monitoring individual performance, achievements, competencies and opportunities for development. Percent of Auditors with Professional Certifications (100% Target)

All Internal Audit staff are required to possess at least one certification. Through the City’s Talent Management Program, staff are encouraged to continue to explore development opportunities and additional certifications.


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COMMON THEMES AND ISSUES – ANALYSIS OF 2018 INTERNAL AUDIT REPORTS

Individual internal audit reports can be useful in advising management and Council on risk and control issues that may affect the successful operation of a program, process or department. Individual reports, however, do not always address broader risk and control themes. Similar issues may arise over a series of reports that could point to a more systemic or reoccurring set of issues requiring a more organizational or holistic perspective of risk and control. Identifying themes and addressing them holistically helps better address systemic causes. A total of seven reports were completed, presented and approved by Council in 2018. The top themes that emerged are:

1. Developing processes to periodically evaluate direction, strategy, programs and service delivery to ensure efficient and effective deployment of resources to achieve the City’s Term of Council Priorities and Strategic objectives.

2. Improving budgeting and forecasting processes to better align Council directives and corporate strategy with resource allocation.

3. Improving project management, contract administration and management oversight.

4. Updating the content of City policies, procedures and guidelines while providing more clarity on roles, responsibilities and expectations of stakeholders.

Internal Audit will continue to report on reoccurring themes on an annual basis, as per the City’s Internal Audit Policy.


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ANONYMOUS REPORTING SYSTEM – ANNUAL UPDATE

Background and Purpose:

The City’s Anonymous Reporting System was implemented on April 15, 2014 as an additional mechanism for employees to confidentially and anonymously report suspected fraud and code of conduct violations. Report intake is operated independently by a third party and is accessible by internet and toll-free phone number. It is available 24 hours a day, 7 days a week. An employee who chooses to file a report is asked to create a password and is provided with a unique case tracking number so that they can log back into the system to follow the progress of their report, provide further details and to answer any questions posed by the investigator, a member of the City’s Internal Audit team. Depending on the nature of the issue, management may be required to assist Internal Audit with an investigation. The City’s service provider, NAVEX Global, maintains a Global Database of performance metrics based on all the clients they serve. NAVEX issues an annual report that compares data from its participating clients against the industry benchmarks. For statistical accuracy, the analysis includes only those organizations that received 10 or more reports in 2018. The resulting database includes 2,738 customers that received a total of 1,032,953 individual reports. Comparing the City’s anonymous reporting use to the NAVEX Global Database is a good indicator to help gauge the success of the City’s program and opportunities for improvement. Performance Criteria:

Overall, staff use of the Anonymous Reporting System continues to meet expectations based on the measurement criteria used to benchmark the City’s use to the Global Database. The criteria include:

• Report Volume per 100 Employees

• Report Allegation Categories and Substantiation Rates

• Reporter Follow-up Rate

• Anonymous vs Named Reporters

• Case Closure Time


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Report Volume per 100 Employees

Report volume per 100 employees is a measurement that enables the City to estimate the number of potential reports it will receive in a given year. In 2018, the Global Database median reports per 100 employees remained unchanged at 1.4. Based on this statistic and the number of full-time employees in the City of Vaughan and Vaughan Public Libraries [approximately 1500], we would have required 21 reports in 2018 to be at the median. The City received a total of 30 reports in 2018, up from 19 in 2017. Since the system was introduced, we have received a total of 95 reports, which averages to approximately 19 reports a year. Due to the dynamic nature of a hotline program, it is expected that there may be report volume fluctuations from year to year. Therefore, the year over year increase in reporting activity and being over the median in overall report volume for the year should not be viewed as a concern.

Report Allegation Categories and Substantiation Rates

Allegation category reporting helps identify themes and trends. In addition, comparing the results to those of the Global Database helps determine if the City has different themes that might point to specific issues. Substantiation Rate is a measurement that reflects the rate of allegations made which could be determined to have at least some merit. At the City, all allegations are initially considered to have merit until they have been concluded. During the investigation process, some reporters may not have provided enough information or not responded to questions posed by the investigator. This may shift the allegation to the unsubstantiated category. In addition, if the conclusion does not support the allegation, then the case is considered unsubstantiated.

Based on the 30 reports received:

• None of the reports received were related to accounting, auditing and financial reporting issues such as financial misconduct, internal controls and expense reporting. The 2018 Global Database median comparison for this category is 2%. The 2018 Global Database substantiation rate for this category is 50%.

• Four cases (or 13%) related to business integrity issues such as conflict of interest, policy violation and vendor/customer issues. The 2018 Global Database median comparison for this category is 16%. One (or 25%) of these reports was substantiated. The 2018 Global Database substantiation rate for this category is 50%.

• Seventeen cases (or 57%) related to HR, diversity and workplace respect issues such as hiring irregularities, discrimination, harassment and favouritism. The 2018 Global Database median comparison for this category is 70%. Two (or 12%) of these reports were substantiated. The 2018 Global Database substantiation rate for this category is 40%.


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• Two cases (or 7%) related to environmental, health and safety. The 2018 Global Database median comparison for this category is 6%. One (or 50%) of these reports was substantiated. The 2018 Global Database substantiation rate for this category is 50%.

• Seven cases (or 23%) related to the misuse or misappropriation of corporate assets including theft and time abuse. The 2018 Global Database median comparison for this category is 5%. Two (or 29%) of these reports were substantiated. The 2018 Global Database substantiation rate for this category is 50%.

In 2018, six (or 20%) of the thirty reports received were substantiated. The 2018 Global Database overall substantiation rate comparison is 42%. Our overall substantiate rate since the system was implemented is 23%. It should be noted that not all substantiated reports reflect unethical conduct. It may reflect the absence of or non-enforcement of policy/procedure or improper application of a business process. In addition, an unsubstantiated report does not necessarily mean that the report was without merit. For a majority of the unsubstantiated cases, we were unable to substantiate the report due to insufficient details or evidence. An unsubstantiated report can still highlight potential risks and control weaknesses that may need to be addressed. Reporter Follow-up Rate

Another measurement that has a direct impact on Substantiation Rates is the Reporter Follow-up Rate. This rate indicates the percentage of reporters who followed-up on their report submission. There is a greater risk that cases will be deemed unsubstantiated when reporters do not follow up on their reports, as specific detail that may be required to conduct a thorough investigation may inadvertently be withheld. In 2018, 83% of all reporters logged back in to follow-up on their report. This compares favorably to the 2018 Global Benchmark Rate of 20%.

Anonymous vs Named Reporters

The Anonymous vs Named Reporters rate shows the percentage of all reports submitted by individuals who chose to withhold their identity. The trend of reporters choosing to remain anonymous continues as 29 of the 30 (or 97%) reporters chose to remain anonymous. The 2018 Global Benchmark Rate is 57%. Factors influencing anonymity include the level of trust participants have that their information will remain confidential, the significance of the issue being reported and the confidence that the report will be acted on. The preference for anonymity illustrates that without access to an Anonymous Reporting System, there is increased risk that staff may not report important issues such as code of conduct violations, suspected fraud or misappropriation, privacy issues and inappropriate relationships between employees and contractors/vendors.


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Case Closure Times

Case Closure Time is the number of calendar days it takes an organization to complete an investigation and close a case.

Earning employee trust is not a simple task, especially when it comes to many of the sensitive topics that are reported. Ensuring that employees know their concerns are important and are being seriously considered is a vital step towards that task. If months go by without resolution, or weeks go by without indication of action, reporters can feel that their concerns are not being heard and the credibility of the program can be damaged or lost. Since the system was launched, there have been significant year over year improvements in the ability to address reporter’s concerns in a timely manner. In 2018, our median case closure time was 11.5 days. This compares favourably to the 2018 Global Benchmark median case closure time of 40 days. The ability to investigate and close cases in a timely fashion helps foster a culture where concerns are taken seriously and builds organizational trust in the system.


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STATUS OF MANAGEMENT ACTION PLANS - ANNUAL UPDATE Background and Purpose:

Follow up of Internal Audit recommendations through Management Action Plans (MAPs) is performed to ensure that management actions have been effectively implemented and appropriate controls and processes have been put in place to mitigate risks identified during the audit. For every recommendation, management provides Internal Audit with the name of the individual who is accountable and responsible for implementing the MAPs and an estimated completion date. Internal Audit assesses the estimated completion date for reasonableness and timeliness of the action, based on the assessed risk.

The individual who is accountable for implementing the MAPs provides Internal Audit with a written update on their progress shortly before the implementation deadline approaches. The update includes whether each MAP has been completed, is still in progress, or is not yet started. If a MAP has been completed, Internal Audit will verify that the action plan addresses the risk outlined in the report.

Management provides a detailed explanation if an action plan is still in progress or not yet started and provides a new estimated completion date. Internal Audit assesses the new estimated completion date for reasonableness and timeliness, based on the assessed risk.

Council requested that Internal Audit provide an annual report on the status of completed and outstanding management action plans to address audit report recommendations.

Scope:

The scope of this update includes 14 audit reports containing 78 recommendations presented to the Finance, Administration and Audit Committee (FA&A) from October 2012 through December 2018. As of April 15, 2019, management has fully implemented 51 of those MAPs, or 65%. A total of 27 MAPs, or 35% are in progress. A table summarizing the number of audits completed and recommendations issued by report is included as Appendix B, which can be found at the end of the report. The following are comments regarding those MAPs that are in progress: PARKS AND FORESTRY OPERATIONS AUDIT

The Parks and Forestry Operations Audit report was presented to FA&A on October 15, 2012. The report contained five recommendations. All recommendations have now been fully implemented. ACCOUNTS PAYABLE AUDIT

The Accounts Payable Audit report was presented to FA&A on February 11, 2013. The report contained four recommendations. All recommendations have now been fully implemented.


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RECREATION AND CULTURE REVENUE AUDIT

The Recreation and Culture Revenue Audit report was presented to FA&A on March 9, 2015. The report contained twelve recommendations. One (or 8%) of the audit recommendations remain outstanding.

According to the Director of Financial Services and Deputy Treasurer, the Accounts Receivable Supervisor meets quarterly with the Client Services Manager of Recreation Services to review the aging report produced by CLASS to assess collectability. Any accounts deemed uncollectible are handed over to Financial Services for further action. This may include the use of a collection agency and thereby ensures that we are using one agency. Recreation Services accounts submitted for collection have been of minimal dollar amounts. Financial Services has been consolidating collection activities and will review establishing a collection agency policy once consolidation has been completed (expected completion in 2019). ROAD OPERATIONS AUDIT

The Road Operations Audit report was presented to FA&A on September 8, 2015. The report contained seven recommendations.

Five (or 71%) of the audit recommendations remain outstanding.

According to the Manager of Parks and Roads, Parks and Forestry Operations, the Occupational Health and Safety Training draft training matrix is complete and compliance is being monitored based on the training matrix and training recorded in Halogen. The last step is to develop the outline of the entire training plan, prior to implementation in Q2, 2019. The Road Patrol Management System is currently being implemented. The software ensures that patrol frequencies meet legislative requirments. Feasibility of integration with the asset management is still ongoing. Similar to the Road Patrol Management System, the Work Order Administration recommendation is a project between TSPFO and Infrastructure Planning and Corporate Asset Management with the anticipated roll out in 2021. The recommendations associated with Policies and Procedures are almost complete. The SOPs will go forward in September 2019 for approval. According to the Director of Fleet Management Services, the tool for evaluating leasing versus purchasing of assets has been completed and communicated to all stakeholders. A revised corporate policy to reflect these changes will be brough forward to policy committee for approval in 2019. IT SECURITY CONTROLS AUDIT

The Information Technology Security Controls Audit report was presented to FA&A on December 8, 2015. The report contained three recommendations. One (or 33%) of the audit recommendations remain outstanding.


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According to the Chief Information Officer, since the completion of the audit, the Office of the Chief Information Officer has implemented several improvements to address the recommendations, including:

• Deployed unauthorized device detection technology.

• Developed corporate software standards, IT security standards and key security performance measures.

• Performed inventory and cleanup of obsolete software on corporate systems.

• Implemented the vulnerability assessment and remediation program.

• Developed and implemented IT security incident response process.

• Delivered IT security awareness training for project managers and other staff.

• Developed a formal user off-boarding process.

• Deployed mobile device encryption.

• Performed administrative password randomization on all client systems.

• Developed Acceptable Use of Technology Policy and Terms of Use.

• Deployed secure Wi-Fi network for corporate smartphones.

• Secured funding and established IT Infrastructure Penetration testing program. The first assessment is currently in progress, with subsequent assessment scheduled to take place once per year.

The project to implement Network Access Control is currently underway, with Phase I (Protection of all City Hall public facing network ports) to be delivered by the end of Q3 2019. Once all public facing City Hall network ports are protected, Phase II will be initiated, expanding access control to remote sites. CORPORATE OVERTIME AUDIT

The Corporate Overtime Audit report was presented to FA&A on February 1, 2016. The report contained five recommendations. Four (or 80%) of the audit recommendations remain outstanding. According to the Chief Human Resources Officer, the implementation of these recommendations is progressing as planned. The Time and Labour Management Project is well underway and was approved as part of the 2019 capital budget. Staff have been working on an implementation plan for 2019 which includes selecting a vendor and starting with the highest risk areas and moving to implement across the organization. The implementation of


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the time and attendance system will help us better understand what drives overtime costs and its impact on service delivery. However, staff have worked on identifying the drivers of overtime such as occupational illnesses with our emergency responders and a plan has been put in place to mitigate overtime costs. A comprehensive Wellness strategy is currently being developed and part of the 2019 City’s Strategic Plan for this term of Council. In addition, policies have been updated to increase the value of lieu banks of nonunion employees from one week to two weeks. Lastly, a draft overtime policy was approved in principle by the policy committee on March 26, 2019. A communication and implementation plan is currently being developed. ANONYMOUS REPORTING SYSTEM ANNUAL REPORT - 2016

The Anonymous Reporting System annual report was presented to FA&A on May 30, 2016. The report contained three recommendations. Two (or 66%) of the audit recommendations remain outstanding. According to the Chief Human Resources Officer, several activities have taken place over the past year to enhance the City’s corporate governance, accountability and transparency framework. They include:

• Development of a policy committee.

• Approved policy development framework based on leading practice.

• Prioritization of policies requiring attention.

• Updated employee code of conduct.

• Updated respectful workplace and workplace violence policies.

A draft ethics and compliance framework was presented to the corporate management team in April 2019. The senior leadership team has also been working on a governance framework that will be approved in Q2 2019 and a sub-component of this governance framework will be a leading practice ethics and compliance framework.

Providing an anonymous reporting mechanism to the public, including Vaughan residents, vendors and visitors, is an approach that may help mitigate the risk of unethical behaviour and would reiterate the City’s commitment to corporate governance, accountability and transparency. The Director of Internal Audit has been tasked with doing further research into the possibility of expanding the Anonymous Reporting System to the public and, in consultation with senior management, will report back during this Term of Council on the best practices in other jurisdictions and a recommended approach.

SOCIAL MEDIA AUDIT

The Social Media Audit report was presented to FA&A on March 6, 2017. The report contained four recommendations.


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One (or 25%) of the audit recommendations remain outstanding.

According to the Director of Corporate and Strategic Communications, developing a comprehensive Social Media Governance Framework is complete and will be rolled into a comprehensive review of the City’s communications policies in Q2 2019. EVENT MANAGEMENT AUDIT

The Event Management Audit report was presented to FA&A on June 6, 2017. The report contained nine recommendations. Three (or 33%) of the audit recommendations remain outstanding. The outstanding recommendations are on target for completion based on the timelines provided in the audit. According to the Director of Recreation Services, several improvements to address the recommendations have been implemented, including:

• “Raisin” software/technology has been leveraged for Vaughan Celebrates sponsorship program in addition to the Mayor’s Gala and Golf events.

• Event budgets are more closely aligned with historical performance.

• The Manager of Risk Management is consulted for extraordinary or extenuating circumstances related to City events.

Staff have been working with a consultant to develop an Events Strategy & Implementation Plan. This project aligns with Council priorities, as well as the City’s Service Excellence Strategic Initiatives. A key component is consultation, including Mayor and Members of Council, to gain feedback on events, protocols, costs and benefits associated with events. The scope of this project is to provide a guide for the future framework for events (City-led, community-led, joint partnerships, and new events) and align financial and staff resources with identified priorities, mission, and objectives for events in Vaughan. The project Steering Committee has representation from across the organization. Several key external stakeholders have been identified and will be engaged in the development of this Events Strategy. This project is scheduled to be presented to Council in Q4 2019.

EMERGENCY, SOLE AND SINGLE SOURCE PROCUREMENT AUDIT

The Emergency, Sole and Single Source Procurement Audit report was presented to FA&A on June 6, 2017. The report contained four recommendations. All recommendations have now been fully implemented. PURCHASING CARD AUDIT

The Purchasing Card Audit report was presented to FA&A on November 6, 2017. The report contained two recommendations. All recommendations have now been fully implemented.


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CONSTRUCTION AUDIT OF FIRE STATION 7-4: PHASE 1

The Construction Audit of Fire Station 7-4: Phase 1, was presented to FA&A on June 6, 2018. The report contained seven recommendations. Five (or 71%) of the audit recommendations remain outstanding. According to the Director of Infrastructure Delivery, a city-wide approach to Project Management and Change Management is underway with a significant mandate change within the Office of Transformation and Strategy (OTS). The OTS now includes a new mandate for an Enterprise Project and Change Management Office (EPCMO). This mandate enhances the current mandate of the CPMO and ensures authority and oversight at a corporate level. Through standardized project management and change management governance, OTS will work across the organization to collaboratively establish project and change management roles and responsibilities, accountabilities, planning, delivery, monitoring and reporting functions on a consistent and disciplined basis. In addition, an Enterprise Risk Management (ERM) Framework will be developed to facilitate identification of project risks, consequences and mitigations based on a scalable ERM model, depending on risk factors, probabilities and severities of risks to be mitigated. A comprehensive review of the PMPM (Project Management Procedures Manual) was initiated in 2018 and is expected to be completed by the end of Q2. The review will clarify roles and responsibilities, improve project controls and further refine reporting requirements as well as standardizing documentation. All projects submitted as part of the 2019 budget were reviewed and updated to:

• Reflect current funding requirements (including cash-flow projections)

• Identify planned timelines for delivery, and

• Further refine project deliverables

As part of the efforts being undertaken in the second audit recommendation, a standard business case template has been developed and incorporated in the updated PMPM. The PMPM requires that business cases for all significant new capital projects be developed in collaboration with all stakeholders. Based on feedback and suggestions received through several focus group sessions and the subsequent discussions with client departments, the Vendor Performance Procedure and Evaluation Forms for all types of vendors, including consultants and construction contractors, have been revised to support the Vendor Performance Evaluation program for all departments for implementation. The pilot program is under way and will be rolled out on a corporate wide basis upon successful completion of the pilot program, which is expected at the end of Q2. All processes, including the pre-qualification process follow a continuous improvement approach, where lessons learned are incorporated into future procurement processes. Funding for the project to develop general design and construction standards for reoccurring projects was approved as part of the 2019 Budget. The RFP for the consulting services needed to undertake this work will be released in Q3-2019. The project will create general


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design and construction standards for municipal buildings, such as fire stations, community centres and libraries. FORESTRY AND HORTICULTURAL OPERATIONS AUDIT

The Forestry and Horticultural Operations Audit report was presented to FA&A on June 6, 2018. The report contained six recommendations. Four (or 67%) of the audit recommendations remain outstanding. According to the Manager of Forestry & Horticulture, a proactive and properly resourced life cycle maintenance program will allow the City to achieve its operational objectives and provide the tools required to maintain the City’s forest cover at an appropriate service level. By developing a seven-year lifecycle street tree pruning plan, Forestry will be bringing maintenance standards in line with arboricultural best practices. Forestry has calculated the resources required to implement this plan and to bring the maintenance standards in line with a 7-year arboricultural industry standard. The lifecycle maintenance program, quality standards and overall strategy will be presented to Council in Q4 2019. Since the audit has been completed, Forestry Operations has dedicated staff to ensuring contract compliance, as well as reconciling billing with inspection reports, and following up with the contractor if any discrepancies or deficiencies are noted, prior to payment. As part of contract compliance, staff verify that substitutions have been documented and approved prior to planting, as stated in the contract. There are no increases in price for species substitutions in 2018. Forestry Operations is in the process of updating its contract planting specifications, including the two-year warranty period, which will specify warranty tree care activities (e.g. regular watering). Currently Forestry, in conjunction with TSPFO Business and Contract Services is preparing a RFPQ to prequalify vendors for the tree planting tender. Forestry Operations is currently documenting and assessing the current state of its business process; Forestry has commenced defining roles, responsibilities and accountabilities within its structure. Forestry has centralized most of the work order administration process, has also streamlined the Work Order Call Types and is currently standardizing work order terminology/documentation and the use of statuses. The centralization of the work order process under Forestry’s influence, combined with clearly defining roles, responsibilities and accountabilities within its structure has yielded efficiencies. With respect to the private tree permit inspection process, Forestry is in the process to completing this business flow, defining roles, responsibilities and accountabilities (SOP). Forestry has updated the Tree Removal Permit assessment form, tracking file, and is currently in the process of developing a follow up inspection program for replacement plantings. WINTER MAINTENANCE AUDIT

The Winter Maintenance Audit report was presented to FA&A on June 6, 2018. The report contained seven recommendations. One (or 14%) of the audit recommendations remain outstanding. The outstanding recommendation is on target for completion by Q2 2020.


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According to the Manager of Parks and Roads, several improvements to address the recommendations have been implemented, including:

• Management updated the Thawrox management plan setting out a procedural business framework to ensure the City’s continuous oversight of this program to improve upon the usage of Thawrox in winter maintenance operations. This included a framework for oversight and improvement of Thawrox usage and a plan to prevent and respond to supply shortages.

• TSPFO has created flow charts as a guide for staff to outline the winter operations program and to clarify roles and responsibilities. Training events have been held to train staff on these procedures and related standard operating procedures have been developed.

• Management has developed Standard Operating Procedures to provide detailed contract management guidelines for staff, including: Inspection Protocol, Document Management, Mobilization and Financial Management.

The outstanding recommendation pertains to the execution of a study to evaluate the current Council approved service levels and overall winter maintenance strategy and programs. TSPFO is currently assessing if the Corporate Wide Service Level Review project can meet the objectives of this study. The objectives include:

a. Risk assessment of the current Roads winter maintenance service levels from the following perspectives:

i. Cost-benefit ii. Operational iii. Environmental

b. Scan of peer municipality Roads winter maintenance service levels c. Recommendations for future Roads winter maintenance service levels d. Cost-benefit analysis of recommendations for future Roads winter maintenance service

levels e. Recommendation for a Winter Reserve strategy f. Development of a KPI framework to measure the recommended Roads winter

maintenance service levels If the objectives of the Corporate Wide Service Level Review align with the objectives of TSPFO study, then the Corporate Wide Service Level Review will be leveraged to complete this audit finding. If not, TSPFO will launch a separate study.

CONCLUSION

Internal Audit will continue to contact management as their action plans come due to determine if they have been implemented, and will continue to partner with management in their efforts to address audit observations as planned. When plans cannot be completed as originally intended, audit staff will work with management to obtain updated achievable implementation dates.


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2015 – 2018 INTERNAL AUDIT WORK PLAN STATUS AND SCHEDULE

The 2015 – 2018 Internal Audit Risk Based Work Plan was developed using a risk assessment process that combined financial, reputational, compliance and operational criteria. Internal Audit has a professional responsibility to develop an audit work plan that focuses on the key risks in the City. The work plan should be dynamic and flexible. Changes to the work plan may be required occasionally to reflect emerging risks and changes in strategic objectives. The table below provides a high-level summary of all the work plan engagements that were scheduled for this Term of Council and their status.

Audit Project

Rationale and Risks

(Why are we doing this Audit/Project?)

Status

Reporting

Date

Recreation and

Culture Revenue

Audit

Rationale: Recreation and Culture represents the City’s third highest expenditure (approximately $20M). Recreational and Culture programs are largely fee supported, contributing approximately $18M in revenue. These services have high citizen focus. Risk: If services are not delivered up to public expectation there could be increased public dissatisfaction. In addition, there is some financial risk as there are significant revenues.

Complete

Presented to FA&A on March 9,

2015

Road Operations

Audit

Rationale: The City has a responsibility to maintain safe roads and sidewalks. This has a high citizen focus and could have a potential reputational risk. Maintenance standards are set by City Council but must, at least, meet legislated standards set by the province. Risk: The absence of an effective maintenance program can result in serious injury. Not maintaining complete or accurate records could result in the inability of the City to demonstrate compliance resulting in fines, penalties or potential litigation.

Complete

Presented to FA&A on

September 8, 2015


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Audit Project

Rationale and Risks


Status

Reporting

Date

Hiring Practices

Audit

Rationale: This project was added to the work plan as a direct result of the number of anonymous reports received related to hiring irregularities during the first year of the system’s operation. Risk: The absence of an effective recruitment process can result in not hiring the best available talent, damage staff morale and cause reputational damage to the City.

Complete


September 8, 2015

Information

Technology

General Controls

Review

Rationale: Information and the technology supporting information are vital for the City to operate effectively. Critical applications such as the JDE system reside on servers within City facilities and are required to be protected from unauthorized access or loss.

Risk: The absence of effective physical and logical access controls could result in data loss, privacy issues and manipulation of data. This could result in fines and penalties related to compliance legislation and reputational damage to the City.

Complete


December 8, 2015

Corporate

Overtime Audit

Rationale: Hourly paid employees are entitled to overtime as per legislation and negotiated labour agreements. Tracking and paying overtime is supported by timekeeping systems to help ensure the right amount is paid based on entitlement. Risk: If time keeping systems are not effective there is the risk that incorrect overtime payments can be made resulting in financial loss and non-compliance with agreements.

Complete


February 1, 2016


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Audit Project

Rationale and Risks


Status

Reporting

Date

Driver

Certification

Process [DCP]

[MTO

Compliance]

Rationale: Prior to 2014, participating organizations, including municipalities, were subject to periodic limited-scope compliance inspections conducted by the Ministry. As of January 2, 2014, all participating organizations are required to arrange for an independent, comprehensive audit using an audit program and reporting form prepared by the Ministry. Internal Audit received approval from the MTO to do the audit and, going forward, will perform all DCP related audit work. Risk: The risk of not performing the audit is non-compliance with Driver Certification Program requirements and the City’s agreement with the MTO. This in turn may result in the removal of the City from the Program and additional costs and time for driver training and testing by the MTO before drivers’ licenses can be renewed and/or upgraded.

Complete

VFRS Audits presented

March 9 and June 15 2015

FA&A and September

17, 2018 CW

VFRS and Fleet

Services DCP Audits

presented on September 6, 2016 FA&A

VBEC

Rationale: The City established the Vaughan Business Enterprise Centre (VBEC) in 2001, through a partnership agreement with the Ministry of Research and Innovation (MRI). VBEC’s core responsibility is to support local entrepreneurs and small businesses. This is accomplished through the provision of advice and education for entrepreneurs in the early stages of business start-up and growth through one-on-one consultations, business plan development and review, business registrations, business events, and the delivery of business seminars/workshops.

Risk: VBEC’s services, programs and events should be tied to the needs of the business community. The absence of effective administration, stewardship and metrics to track initiatives can result in lost economic opportunities and reputational damage to the City.

Complete

Presented to CW (CS) on December 5,

2016


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Audit Project

Rationale and Risks


Status

Reporting

Date

Social Media

Rationale: Social media is defined as using Internet based applications to send and/or collaborate on information. Public sector transparency and accountability is supported by electronic social media, the use of which has grown significantly in the City of Vaughan. Risk: Anyone with an Internet based device can, with near anonymity and without accountability, participate in public or private information or disinformation. The absence of effective social media communication protocol combined with the potential misuse of social media can result in data privacy issues, reputational damage to the City and erosion of trust.

Complete


2017

Event

Management

Rationale: The City sponsors events that help promote various charities and related City-wide initiatives. Good administration and stewardship of

related funds is vital in maintaining event integrity.

Risk: Events supported by Council have high media and citizen visibility. The absence of effective administration and stewardship controls can result in financial loss and negative public perception.

Complete


June 6, 2017

Emergency,

Single and Sole

Source

Procurement

Audit

Rationale: The City’s Corporate Procurement Policy establishes the guiding principles for procuring goods, services and construction. It is expected that the City should receive best value for money spent while demonstrating the public procurement principles of fairness, openness, transparency and accountability. Competitive procurement processes should be used wherever possible while ensuring that non-competitive procurement is used only in narrowly defined circumstances. Consequently, the audit of Emergency, Single and Sole Source Procurement was requested and approved by Council on November 15, 2016.

Risk: Deficient emergency, single and sole source procurement practices can lead to financial loss, reputational risk and citizen and vendor dissatisfaction.

Complete


June 6, 2017


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Audit Project

Rationale and Risks


Status

Reporting

Date

P-Card

Compliance

Review

Rationale: P-Cards allow for the purchase of low value goods in a timely and cost-effective manner. When properly issued and used, they support the purchase of low value goods more efficiently with the capability of improving control and accountability. Risk: If P-Cards are not used properly or in compliance with policy, the City could face some degree of financial loss, as well as public exposure or reputational risk leading to citizen and vendor dissatisfaction.

Complete

Presented to

FA&A on November 6,

2017

Governance and

Accountability -

Follow-Up Survey

Rationale: Governance and Accountability are key foundation components vital in building a City that shares the trust of both citizens and staff. One of the more important roles of Internal Audit is to evaluate the effectiveness of the City’s Governance and Accountability framework. One tool being used is a survey. This survey has been done in 2013 and 2015 and will be redone in 2017 to track any changes and further develop trending information. Risk: The absence of good governance and accountability can affect the credibility and reputation of the City.

Completed in 2015 and 2017

Presented to

FA&A on April 13, 2015 and February

5, 2018

Winter

Maintenance

Audit

Rationale: The Winter Maintenance Program keeps roads and sidewalks safe and passable for pedestrians, cyclists and motorists. Ontario Regulation 239/02 sets out the Minimum Maintenance Standards for Municipal Highways and, among other items, defines when a road can be deemed to be in a state of repair with respect to snow accumulation and ice formation. Driving and walking conditions in winter can deteriorate and vary dramatically due to snowfall and ice formation, causing significant reduction in pavement friction and increasing the risk of accidents. Risk: The absence of an effective winter maintenance program could result in serious injury, reduced emergency services response time and increased liability to the City. Winter maintenance operations also incur significant monetary costs and can result in negative environmental impacts.

Complete


June 6, 2018


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Audit Project

Rationale and Risks


Status

Reporting

Date

Forestry

Operations

Rationale: Re-establishing the urban tree canopy is a Service Excellence Term of Council Priority. Maintaining city trees is a significant part of promoting community health and environmental sustainability.

Risk: If trees are not properly maintained, this could lead to citizen dissatisfaction and damage the City’s reputation. In addition, there is a financial risk if the delivery of services by contractors and other service providers is not properly managed.

Complete

Presented to

FA&A on

June 6, 2018

Water,

Wastewater and

Stormwater

Operations Audit

Rationale: Water supply for all municipalities is closely regulated by the Province of Ontario which provides assurance to citizens that drinking water is safe. An audit done in 2012 concluded that the City of Vaughan has processes in place that meet and, in some cases, exceed the Ontario regulations. The audit did, however, identify issues related to service contract acquisition and administration. Risk: Ineffective administration controls could result in overpayments or the inability to monitor contract performance. A follow-up audit was originally scheduled to determine if processes have been improved. However, due to changes in management and time elapsed, the project will change from a Follow-up Audit to a brand new audit of Water, Wastewater and Stormwater Operations.

Complete

Scheduled to be presented to FA&A on June 5, 2019

Construction

Audit of Fire

Station #7-4

Rationale: Individual Capital Projects can represent a significant investment for the City. Large projects are managed from a variety of aspects including financial, timeliness and meeting deliverables. Audits of individual projects can provide assurance that risks are properly managed. Risk: If projects are not properly managed the greatest risk is they do not meet their deliverables either by not being on time or on budget. Projects that are late or over budget can lead to financial loss, quality reduction and erosion of public trust.

The Construction Audit of Fire Station #7-4 will encompass the complete lifecycle of the project and will be conducted in 3 phases. The timing of these reports is dependent on the actual construction project timing.

Phase 1 was

presented to

FA&A on

June 6, 2018


2018 ANNUAL REPORT

____________________________________________________________________________

Page 35

Audit Project

Rationale and Risks


Status

Reporting

Date

Facility

Maintenance

Services

Rationale: The City’s buildings and facilities have a high operating budget and high public exposure. The operation and maintenance of these assets are vital in supporting the City’s vision of demonstrating service delivery excellence and community safety. Significant organizational changes were made in 2014 and an audit will determine if previously identified issues have been resolved.

Risk: If buildings and facilities are not adequately maintained citizen dissatisfaction would increase. In addition, there could be health and safety issues resulting in possible legal exposure.

In Progress

Q4 2019

Legal Services

Rationale: The Office of the City Solicitor provides a range of legal services that supports the City’s corporate objectives through strategic legal advice and real estate services. As the City continues to grow and work expands, it is important to ensure that the services provided continue to meet the City’s objectives. Risk: Legal processes positively contribute to the City’s business objectives. However, if not managed properly, there may be increased risk of liabilities, increased costs/expenses and damage to the City’s reputation.

Complete


2019

Corporate

Security

Rationale: Facility Maintenance Services maintains and manages the security of all City of Vaughan owned buildings and is responsible for developing, implementing and maintaining a security strategy throughout the organization as it relates to the Criminal Code of Canada, Trespass to Property Act and the Public Works Protection

Act. Risk: Not having an effective corporate security strategy can result in increased risk to public safety, damage to City property and increased liability and reputational risk.

Cancelled

N/A


2018 ANNUAL REPORT

____________________________________________________________________________

Page 36

Audit Project

Rationale and Risks


Status

Reporting

Date

Consulting and

Professional

Services

Rationale: As the City continues to grow and work expands, additional resources are needed to provide services. Consulting and professional services are used to either backfill for extra work or perform work where additional skills are needed. Consulting and professional services represent a significant expenditure to the City. Risk: Not having effective controls over the use and administration of consulting and professional services can result in work not meeting expectations, increased costs and reputational damage to the City.

In Progress

Scheduled to be presented to FA&A on October 7,

2019

General Internal

Audit Follow-up

Program

Rationale: As part of the Internal Audit reporting process, Internal Audit and clients agree on action plans to address issues identified in the report. Follow-up is done to determine if the action plans have been implemented. Risk: If action plans are not followed up there is the risk they may not be implemented. Risk and control exposures could still be outstanding and have a negative impact on the City. There is also the risk that initial action plans may not have been suitable. Internal audit can work with clients to develop more suitable plans if warranted.

Ongoing

Ongoing activity with

annual report to FA&A.

Anonymous

Reporting System

Administration

Rationale: The City adopted an Anonymous Reporting System in 2014. The purpose of the system is to allow for staff and management to have an alternative method to raise concerns or issues that may negatively impact the City. Risk: The risk of not properly administering the Anonymous Reporting System is that staff may not be forthcoming in communicating bad news or wrongdoing. This could lead to missed opportunities to identify risk areas and to improve processes and controls which could lead to increased operational and reputational risk.

Ongoing

Ongoing activity with

annual report to FA&A.

Appendix A

2018 Audit Client Survey Results

# Statement Positive Negative N/AStrongly

AgreeAgree Disagree

Strongly

DisagreeN/A

1

Internal Audit explained the audit process steps

(i.e. audit planning stage to presentation at

FA&A) at the commencement of the audit.

100% 0% 0% 63% 38% 0% 0% 0%

2The audit took an acceptable amount of time to

complete.88% 13% 0% 38% 50% 13% 0% 0%

3The disruption of daily activities was minimized

as much as possible during the audit.100% 0% 0% 38% 63% 0% 0% 0%

4

Internal Audit exhibited a good understanding of

the goals, objectives, strategy, and processes to

effectively plan the audit.

100% 0% 0% 38% 63% 0% 0% 0%

5Internal Audit demonstrated the technical

proficiencies required to perform this audit.100% 0% 0% 50% 50% 0% 0% 0%

6My business concerns and perspective on key

business risks were adequately considered.100% 0% 0% 38% 63% 0% 0% 0%

7The audit objectives and scope were clearly

communicated to me.100% 0% 0% 38% 63% 0% 0% 0%

Internal Audit staff were:

Professional 100% 0% 0% 63% 38% 0% 0% 0%

Objective 100% 0% 0% 63% 38% 0% 0% 0%

Positive 100% 0% 0% 50% 50% 0% 0% 0%

Willing to Listen 100% 0% 0% 75% 25% 0% 0% 0%

Determined to Build Rapport 100% 0% 0% 75% 25% 0% 0% 0%

Courteous 100% 0% 0% 63% 38% 0% 0% 0%

Constructive 100% 0% 0% 50% 50% 0% 0% 0%

Status updates and communication while the

audit was ongoing was:

Timely 100% 0% 0% 25% 75% 0% 0% 0%

Adequate 100% 0% 0% 25% 75% 0% 0% 0%

Useful 100% 0% 0% 38% 63% 0% 0% 0%

10I was provided opportunities to provide feedback

while the audit was ongoing.100% 0% 0% 63% 38% 0% 0% 0%

The audit report observations were:

Accurate 100% 0% 0% 25% 75% 0% 0% 0%

Clearly Written 100% 0% 0% 50% 50% 0% 0% 0%

Presented with Appropriate Context 100% 0% 0% 25% 75% 0% 0% 0%

12

I was given the opportunity to provide

explanations and responses to the audit

observations contained in the draft report.

100% 0% 0% 38% 63% 0% 0% 0%

Internal Audit’s recommendations:

Were Constructive 100% 0% 0% 38% 63% 0% 0% 0%

Were Feasible 100% 0% 0% 25% 75% 0% 0% 0%

Will Improve Operations/Processes 100% 0% 0% 63% 38% 0% 0% 0%

Will Provide Value to the City 100% 0% 0% 75% 25% 0% 0% 0%

14From my perspective, the audit objectives were

achieved.100% 0% 0% 38% 63% 0% 0% 0%

15

Overall, the audit added value to the City by

enhancing our understanding of risks and/or

improving our approach to managing key risks.

100% 0% 0% 50% 50% 0% 0% 0%

8

9

11

13

Appendix B

List of Completed Audit Projects and Status of Management Action Plans (MAPs)

FA&A

Presentation

Date

Audit Report Year Outstanding Recommendations

# of

Recommendations

in the Audit Report

# of

Recommendations

Completed

# of

Recommendations

In Progress

15-Oct-12Parks & Forestry

Operations2012

All Recommendations actioned and vetted, as of

March 26, 20195 5 0

11-Feb-13 Accounts Payable 2013All Recommendations actioned and vetted, as of

April 12, 20194 4 0

09-Mar-15Recreation & Culture

Revenue2015 Accounts Receivable - Collections & Write-offs 12 11 1

Occupational Health and Safety Training

Implementation of the Route Patrol Manager

System

Work Order Administration

Vehicles, Motorized Equipment and Inventory Use

Policies & Procedures

08-Dec-15 IT Security Controls 2015 Network Access Control 3 2 1

Define Supporting Documentation Requirements

For Overtime Payments

Automate the Time and Labour Management

Process

Understand What Drives Overtime Costs & Impact

on Service Delivery

Examine the Impact of Overtime on Employee

Wellness

Enhance the City’s corporate governance,

accountability and transparency framework by

developing a comprehensive ethics and

compliance program designed to prevent, detect

and respond to fraud and misconduct.

Internal Audit be tasked with doing further

research into the possibility of expanding the

Anonymous Reporting System to the general

public and, in consultation with senior

management, report back to Council on the best

practices in other jurisdictions and a

recommended approach.

06-Mar-17 Social Media Audit 2017Develop a Comprehensive Social Media

Governance Framework4 3 1

Develop a Formal Event Strategy for the City

Develop a Clearly Defined Special Events Permit

Process and Mechanism to Monitor Compliance

with Permits Issued

Determine Which Events Require an Emergency

Management Plan

06-Jun-17

Emergency, Sole and

Single Source

Procurement Audit

2017All Recommendations actioned and vetted, as of

April 12, 20194 4 0

06-Nov-17 P-Card Audit 2017All Recommendations actioned and vetted, as of

April 15, 20192 2 0

Establish a Standardized Project Management

Framework

Enhance the Project Management Procedures

Manual

Enhance the Budgeting and Estimation Process

for Capital Projects

Enhance Vendor Performance Management and

the Pre-qualification Process

Develop General Design and Construction

Standards for Reoccurring Projects

Develop a Formal Strategic Plan to Manage

Existing and Future Activities and Service Levels

Provide Greater Oversight over Contract

Administration

Enhance Monitoring and Oversight Over Work

Order Administration

Improve the Private Tree Permit Inspection

Process

06-Jun-18 Winter Maintenance Audit 2018Reevaluate the City’s Winter Maintenance

Strategy and Service Standards7 6 1

Total 14 Reports - 78 51 27

4

08-Sep-15 Road Operations 2015 7 2 5

01-Feb-16 Corporate Overtime 2016 5 1

3

30-May-16Anonymous Reporting

System Annual Report2016 3 1 2

06-Jun-17 Event Management Audit 2017 9 6

4

06-Jun-18Construction Audit of Fire

Station 7-4: Phase 1 2018 7 2 5

06-Jun-18Forestry & Horticulture

Operations Audit 2018 6 2

Page 1 of 1

Finance, Administration, and Audit Committee Report


TITLE: MASTER FIRE PLAN 2018-2028 IMPLEMENTATION STRATEGY

FROM: Mary Reali, Deputy City Manager, Community Services


Purpose

To provide Council with information regarding the Master Fire Plan Implementation

Strategy related to improvements and future delivery of fire and rescue service in the

City of Vaughan. The Implementation Strategy consolidates all salient objectives and

projects of the Master Fire Plan (MFP).

Report Highlights

The Master Fire Plan Implementation Strategy aligns with the City of Vaughan

2018-2022 Term of Council Service Excellence Strategic Plan.

The legislative requirements governing the provision of municipal fire and

emergency services in the Province of Ontario have been incorporated in both

the Master Fire Plan and the corresponding Implementation Strategy.

Community expectations; including citizens, stakeholders, government

organizations, industries, business owners and corporate partners have been

reflected in the plan.

Many of the 45 recommendations contained in the Master Fire Plan, across all

divisions of the Vaughan Fire & Rescue Service, are already being

implemented. Others, tethered to budget requirements, or reflecting growth,

will be prioritized as part of the annual operating and capital process.

VFRS is a pro-active fire service leader in the value-added delivery of fire

prevention, protection and emergency services, meeting the current and

evolving diverse needs of our City.

Recommendations 1. That the 2018-2028 Master Fire Plan Implementation Strategy report and

presentation be received by Council.

Background

The City of Vaughan recognizes the value of creating a strong community vision through a commitment to strategic planning. This includes the 2018-2022 Term of Council Service Excellence Strategic Plan, which is aligned to Vaughan Fire & Rescue’s strategic priorities; which includes people, processes and technology to deliver on our commitments for this Term of Council and throughout the next ten years. The fire master planning process is intended to support the City’s goals and objectives in creating a City of choice. The provincial “three lines of defence” model has proven to be an effective strategy in reducing the number of fire related fatalities and injuries and reducing the overall impacts of fire while enhancing the safety of firefighters. The three lines of defence include:

i) Public Education and Prevention; ii) Fire Safety Standards and Enforcement; iii) Emergency Response.

The options and recommendations presented within the MFP are intended to optimize the use of this model in providing the most effective and efficient level of fire protection services, with the most value to the community. The analyses within the Master Fire Plan (MFP) have been developed utilizing the previous fire master plan that was completed in 2007. It has now reached the end of its ten-year community planning horizon. The 2018-2028 MFP has been developed in consideration of the municipality's legislative requirements as contained within the Fire Prevention & Protection Act (1997), and the Occupational Health and Safety Act, R.S.O. 1990 (OHSA). In addition, current industry best practices as defined by the Office of the Fire Marshal and Emergency Management (OFMEM) and leading industry organizations such as the National Fire Protection Association (NFPA) have been utilized to guide and inform the recommendations presented. VFRS has implemented the majority of the 2007 MFP recommendations, including additional fire stations and firefighters. The ability of the VFRS to achieve and sustain its identified performance goals and objectives in the delivery of emergency response services are identified in the new 2018-2028 Master Fire Plan and Implementation Strategy. Analyses within the MFP presents findings that indicate the VFRS is proactive in optimizing the use of the first two lines of defence, including the delivery of public education and prevention programs and the application of fire safety standards and

enforcement. VFRS prides itself on being highly visible within the community and takes every opportunity to engage and educate the public on fire safety. Education, inspections and code enforcement are crucial tasks carried out by the VFRS. As our first line of defence, there has been an increased focus on fire prevention outreach and proactive fire safety education across all fire service divisions, with the goal of preventing fires before they occur. Fire safety programs include Alarms for Life, After the Heat, Adopt-a-School, promoting home escape planning, distributing fire safety educational materials to residential owners and occupants, releasing public service announcements through media initiatives and connecting with residents through social media. VFRS are well trained and equipped to undertake the variety of challenges presented to

a modern-day fire service. Training and certification of our firefighters validates our overall

response capabilities and our firefighters have become multi-faceted in their daily

functions, making VFRS more adaptable as a fire and rescue service, capable of

responding to any emergency incident. The VFRS professionalism remains grounded

firmly in education, training and certification and our professional standing validates and

demonstrates credibility to colleagues, City Officials and the public. VFRS continues its

unwavering call to protect and serve.


2007 Master Fire Plan

2007 Fire Master Plan Implementation Strategy

2018 Master Fire Plan and Community Risk Assessment (Dillon Consulting).


The Master Fire Plan Implementation Strategy is derived from the recommendations

outlined in the 2018-2028 Master Fire Plan produced by Dillon Consulting. Council

adopted the current Master Fire Plan and instructed VFRS staff to report back with an

implementation strategy.

Options provided are based on recommendations from the consultant’s report and the

Fire Chief; acknowledging that an annual review of pace and growth of development,

response capacity and service levels, and pending budget approval / funding sources;

will have an impact on future prioritization and strategic implementation.

Financial Impact

A number of the consultant’s recommendations are at no cost to the City, as they

involve updating or annotating existing policies and/or procedures. Any other resources

associated with the recommendations will have to be incorporated with both the

operating and capital budgets within the life of the Master Fire Plan, subject to annual

funding approval.


While there are no direct implications to the Region of York in regard to fire services,

VFRS Fire Administration continues to engage in discussions with York Region

Paramedic Services in regards to potential joint infrastructure ventures as potential cost

saving measures.

Conclusion

The 2018-2028 MFP Implementation Strategy is intended to be a blueprint for future

development of fire protection services in the City of Vaughan. The adoption of the

MFP Implementation Strategy will outline the priorities of a growing community as it

relates to emergency response and public education.

Attachments

Confidential Attachment: 2018-2028 Master Fire Plan Implementation Strategy

Prepared by

Deryn Rizzi, Fire Chief



TITLE: BUILDING PERMIT FEES ANNUAL FINANCIAL REPORT 2018

FROM: Jason Schmidt-Shoukri, Deputy City Manager, Planning and Growth Management


Purpose The report provides the Building Permit Fees Annual Financial Report for 2018 as

required by the Building Code.

Recommendations 1. That the Building Permit Fees Annual Financial Report for 2018 be received, for

information.

Background

The Building Code, requires that a financial report be prepared annually to provide information on the following matters:

i. Total Fees Collected (12-month period) ii. Direct Costs of delivering services (Review of permit applications and inspections of

buildings) iii. Indirect Costs of delivering services (Support and Overhead Costs) iv. The account balance for the Building Standards Service Continuity Reserve

established by Council

Report Highlights 2018 Annual Report (attached)

To comply with the Building Code, the Building Permit Fees Annual Financial Report has been prepared for 2018 and is based on unaudited information.


Not applicable.


This report has been prepared in coordination with Financial Planning and Development Finance Department staff and is based on Council’s previous approvals respecting the Watson & Associates Activity Based Costing Methodology for User Fees Report, and the establishment of the Building Standards Service Continuity Reserve. The Building Standards Service Continuity Reserve was established to stabilize fluctuations in permit revenues resulting from changes or variations in construction activity. The stabilization of permit revenues allows the Building Standards Department (BSD) to meet its legislated requirements; ensuring continuity of service delivery without impacting the general tax base. In order to develop a sustainable financial model for the BSD, a comprehensive building permit fee study was carried out by Watson and Associates in 2017/2018 to ensure fees achieve full cost recovery of direct and indirect costs associated with the delivery of building permits and inspection services. The study benchmarked Vaughan’s building permit fees with other comparable GTA municipalities. Building permit fee recommendations resulting from the study, included a three-year phased-in fee increase approach which started on January 1, 2019.

Financial Impact

The Building Permit Fees Annual Financial Report shows a total of $10,253,741 for

building fees collected in 2018 and a combined total of direct and indirect costs of

$12,994,017. A draw of $2,740,276 from the Building Standards Service Continuity

Reserve funded the net shortfall between revenues and full costs. The 2018 closing

balance in the Building Standards Service Continuity Reserve is $12,830,109.


Not applicable.

Conclusion

The Building Permit Fees Annual Financial Report shows a total of $10,253,741 for

building fees collected in 2018 and a combined total of direct and indirect costs of

$12,994,017. A draw of $2,740,276 from the Building Standards Service Continuity

Reserve funded the net shortfall between revenues and full costs. The 2018 closing

balance in the Building Standards Service Continuity Reserve is $12,830,109.

For more information, please contact: Ben Pucci, Director of Building Standards

Attachments

1. 2018 Building Permit Fees Annual Financial Report

Prepared by

Ben Pucci, Director of Building Standards

Attachment 1

ONTARIO BUILDING CODE - REVENUES

Total Fees Collected (10,253,741)$

ONTARIO BUILDING CODE - EXPENSES

Direct Costs 8,709,910$

Indirect Costs 4,284,107$

TOTAL DIRECT & INDIRECT COST 12,994,017$

CONTRIBUTION TO/(FROM) BUILDING STANDARDS CONTINUITY RESERVE (2,740,276)$

NET BALANCE -$

BUILDING STANDARDS SERVICE CONTINUITY RESERVE

Opening Balance (1) 15,938,530$

Transfer to / (Withdrawal from) Reserve: (2,740,276)$

Transfer to / (Withdrawl from) Reserve - Capital (638,295)$

Estimated Interest 270,150$

CLOSING BALANCE RESERVE 12,830,109$

(1) Opening balance includes $245,678 in transactions processed after the release of the 2017 financial statement. The entries include an additional $47,627 in interest and $293,305 withdrawl from reserve to capitalNote: 2018 Actuals have been provided by the Financial Planning and Development Finance Department.

City of VaughanOntario Building Code Act

Building Standards Service Continuity Reserve2018 Annual Actual Report - Unaudited

(For the Period January 1, 2018 to December 31,2018)



TITLE: FISCAL HEALTH REPORT – FOR THE YEAR ENDING

DECEMBER 31, 2018

FROM: Michael Coroneos, Chief Financial Officer and City Treasurer


Purpose To report on the City’s fiscal health for the year ending December 31, 2018.

Recommendations 1. That, the Fiscal Health Report for the Year Ending December 31, 2018 be

received.

Report Highlights The City’s property tax supported operations ended 2018 in a surplus

financial position of $2.9 million.

Transfers of $0.5 million to the Year-End Expenditure Reserve and $2.4

million to the Working Capital Reserve were made to bring the end financial

position to balance.

Combined, the rate supported operations ended 2018 in a favourable position

of $15.3 million, resulting in a transfer to the reserves that support the renewal

of water, wastewater and stormwater infrastructure.

During 2018, approximately $131 million was spent on 348 capital projects.

160 capital projects were closed in 2018 and savings of $27.2 million from the

closed projects were returned to various originating reserves and reserve

funds.

Background

The fiscal health report tracks actual spending performance of the City’s calendarized

financial plan. This report provides the year-end financial position of the City as at

December 31, 2018 on the same basis as the 2018 budget, with accompanying

commentary on the contributing factors that have affected the City’s fiscal health.

The year-end fiscal health report compares annual actual city operating, water and

wastewater and stormwater operations and capital results as of December 31, 2018,

versus the approved budgets and on the same basis as the budget. This differs from the

basis of accounting in the City’s audited financial statements in some important ways.

The full amortization of tangible capital assets and post-retirement benefits are excluded

from this report while transfers to and from reserves and net debenture financing

requirements are included. The City’s draft audited financial statements are expected to

be presented to Council in June 2019.


FISCAL HEALTH REPORT – SEPTEMBER 30, 2018


Executive Summary

The City’s property tax supported operations ended 2018, before year-end reserve

transfers, in a surplus financial position of $2.9 million, largely attributed to lower than

anticipated overall city expenditures in utility costs, labour costs and contract services

costs across various departments. Approximately $0.5 million of the surplus was

transferred to the Year-End Expenditure Reserve and the remaining $2.4 million was

transferred to the Working Capital Reserve to mitigate tax pressures in 2019 and

beyond.

Combined, the rate supported operations ended 2018 in a favourable position. Prudent

maintenance activities enabled water, wastewater and stormwater operations to

contribute an additional $15.3 million to the Water, Wastewater and Stormwater

reserves. These reserve funds will assist in future infrastructure replacements as these

assets near the end of their useful life.

During 2018, approximately $131 million was spent on 348 open capital projects, an

increase of 20 percent from 2017 capital spending of $110 million. Departments closed a

total of 160 capital projects in 2018 and savings of $27.2 million from the closed projects

were returned to various originating reserves and reserve funds.

At December 31, 2018, there were 642 open capital projects with $265 million of available

budget remaining.

Attachment 1 provides the net position for all City departments.

https://www.vaughan.ca/council/minutes_agendas/AgendaItems/Finance1204_17_2.pdf

Operating Results – Year ending December 31, 2018

Budget

$million

Actual

$million

Variance

$million

Property Tax Based Budget

Revenues 292.5 290.5 (2.0)

Expenditures 292.5 287.6 4.9

Year End Position $0.0 $2.9 $2.9

Reserve Transfer

To Year- End Reserves (0.5) (0.5)

To Working Capital Reserve (2.4) (2.4)

Net $0.0 $0.0

Water Rate Based Budget

Revenues 21.2 26.5 5.3

Expenditures 21.2 26.5 (5.3)

Net $0.0 $0.0 $0.0

Wastewater Rate Based Budget

Revenues 14.3 17.8 3.5

Expenditures 14.3 17.8 (3.5)

Net $0.0 $0.0 $0.0

Stormwater Charge Based Budget

Revenues 9.7 9.5 (0.2)

Expenditures 9.7 9.5 0.2

Net $0.0 $0.0 $0.0

Capital Results – Year ending December 31, 2018

13

80

30

74

28

37

149

194

84

19

40

79

12

15

8

7

2018

2017

2016

2015

2014

2013

2009-2012

2008 and Older

$ Millions

Chart 1 - Open Project Life to Date Expenditures as of December 31, 2018

Spent Unspent

14% spent

81% spent

43% spent

48% spent

70% spent

71% spent

95% spent

96% spent

Discussion

OPERATING BUDGET RESULTS

Overall, City Revenues were $2.0 million lower than the plan.

Budget

$million

Actual

$million

Variance

$million

Variance

%

Department Revenues 56.3 52.7 (3.6) (6.5%)

Corporate Revenues 20.3 24.2 3.9 18.9%

Reserve Transfers 18.3 15.3 (3.0) (16.3%)

Taxation 197.6 198.3 0.7 0.4%

Total Revenues $292.5 $290.5 ($2.0) (0.7%)

Note – numbers may not add due to rounding

Department Revenues were 6.5 percent lower than planned. This negative variance was mainly driven by lower than budgeted recoveries of labour costs from capital funds. The lower recoveries were mainly as a result of vacancies and less time than budgeted spent on capital projects in Infrastructure Planning & Corporate Asset Management, Infrastructure Delivery, Policy Planning & Environmental Sustainability and Office of the City Solicitor. The negative revenue variance was also driven by the deferral of Development Planning fees received in 2018 for application reviews to be completed in 2019.

Corporate Revenues were 18.9 percent higher than planned. This is mainly attributable to higher than expected dividends received from the City’s investment holding company, Vaughan Holdings Inc. In addition, the supplementary taxes received in 2018 was higher than the normal level experienced in past years.

Reserve transfers were 16.3 percent lower than planned. Transfers from the Building Standards Service Continuity Reserve and the Engineering Reserve were less than budgeted, as department expenditures were less than planned in 2018 as a result of lower labour costs mainly due to vacancies.

Overall, City expenditures were $4.9 million lower than plan.

Budget

$million

Actual

$million

Variance

$million

Variance

%

Labour 185.5 183.3 2.2 1.2%

Utilities & Fuel 12.9 10.8 2.1 16.3%

Service Contracts & Materials 35.1 34.2 0.9 2.5%

Capital Related 30.2 30.2 - -

Other 23.4 23.6 (0.2) (0.9%)

Insurance 5.4 5.5 (0.1) (1.9%)

Total Expenditures $292.5 $287.6 $4.9 1.7%

Note – numbers may not add due to rounding

Labour costs were 1.2 percent lower than plan. This is primarily attributable to vacancies across the organization and for positions approved in 2018 that are still in

the recruitment process and that have not yet been filled. Departments will continue to work with Human Resources to complete the recruitment of vacant positions.

Utilities & Fuel were 16.3 percent lower than budget mainly due to lower than expected hydro and gas costs resulting in part from reduced consumption achieved through implementation of energy savings initiatives.

Approximately $1.0 million of excess funds were transferred to the Insurance Reserve to mitigate any future insurance related expenses due to lower than budgeted insurance premiums and deductibles, partially offset by higher than budgeted insurance claims.

Service contracts and materials were 2.5 per cent lower than budget. Savings from contract services were experienced across departments in 2018, notably in areas such as maintenances of facilities, roads, trees, and parks; winter control costs came in over budget moderately and was offset by savings in other service areas.

Attachment 2 provides commentary at the Portfolio/Office level.

Water, Wastewater and Stormwater Results

Fourth Quarter Water Operating Results

Water Operations gross margin was $4.9 million greater than budget.

Budget Actual Variance Variance

$million $million $million %

Residential Billings 40.4 38.1 (2.3) (5.7%) Commercial Billings 26.7 25.2 (1.5) (5.6%) Other 0.4 0.4 0.0 0.0% Purchases/Treatment Charges 41.8 37.0 4.8 11.5% Non-Revenue Water 6.2 2.3 3.9 62.9%

Gross Margin 19.5 24.4 4.9 24.5%

Other Revenues 1.7 2.1 0.4 23.5%

Residential and commercial water sales for the fourth quarter ended lower than

budget by 5.7% and 5.6% respectively due to wetter than normal weather.

As a result of decreased sales, Regional water purchases (direct cost) were lower

than budgeted.

York Region deviated from the posted budgeted wholesale rates for water and

wastewater, increasing the treatment costs for wastewater and decreasing the costs

for water resulting in lower than expected water purchase costs.

Non-Revenue Water (NRW) was lower than budgeted due to a decrease in charges

on the Region bill. The City and Region are investigating to determine reasons for

the lower than expected NRW.

Water Operations expenditures before Lifecycle Contributions were $3.3 million

less than budgeted.



Maintenance and Installation Cost 6.7 4.4 2.3 34.3% General Administration 5.7 4.7 1.0 17.5% Joint Service Costs 0.7 0.7 0.0 0.0% Lifecycle Contribution 8.1 16.7 (8.6) (106.2%)

21.2 26.5 (5.3) (25.0%)

Maintenance and Installation Costs ended lower by 34.3% due to contract

interruptions (hydrant maintenance and main repair), timing of work for activities

such as water service repairs and meter installations. New contracts were awarded

late in 2018, with work ramping up in 2019.

General Administration costs were lower by 17.5% due to position vacancies to be

filled in 2019 and position gapping, professional fees savings resulting from archive

initiative rescheduled to 2019, and a savings in operator training.

City’s net lifecycle contribution was $8.6 million greater than budgeted at the end of the fourth quarter.

Fourth Quarter Wastewater Operating Results

Wastewater Operations gross margin was $3.0 million greater than budget.



Residential Billings 48.5 45.4 (3.1) (6.4%)

Commercial Billings 32.7 31.2 (1.5) (4.6%)

Other 0.4 0.4 (0.0) (0.0%)

Purchases/Treatment Charges 59.3 57.5 1.8 3.0%

Non-Revenue Water 8.9 3.1 5.8 65.2%

Gross Margin 13.4 16.4 3.0 22.4%


Residential and commercial billings for the fourth quarter are trending 6.4% and 4.6% respectively lower than budget due to wetter than normal weather.

Wastewater billing is based on water consumption and therefore trends similar to water consumption.

As a result of decreased sales, treatment charges (direct cost) were lower than

budgeted.

Non-Revenue Water (NRW) was lower than budgeted due to a decrease in charges

on the Region bill. The City and Region are investigating to determine reasons for the

lower than expected NRW

Wastewater Operations expenditures before Lifecycle Contributions were $0.3

million less than budgeted.



Maintenance and Installation Cost 4.0 3.7 0.3 7.5%

General Administration 2.9 2.6 0.3 10.3%

Joint Service Costs 0.4 0.7 (0.3) (75.0%)

Lifecycle Contribution 7.0 10.8 (3.8) (54.3%)

14.3 17.8 (3.5) (24.5%)

General Administration costs were lower by 10.3% due to timing delay in planned

training and professional fees.

City’s net lifecycle contribution was $3.8 million greater than budgeted at the end of the fourth quarter.

Fourth Quarter Stormwater Operating Results

Stormwater Operations gross margin was $0.2 million less than budgeted.



Residential Billings 4.0 4.0 0.0 0.0%

Commercial Billings 5.2 5.0 (0.2) (3.8%)

Other 0.0 0.0 0.0 0.0%

Purchases/Treatment Charges 0.0 0.0 0.0 0.0%

Non-Revenue Water 0.0 0.0 0.0 0.0%

Gross Margin 9.2 9.0 (0.2) (2.2%)


Total annual billing for stormwater charges was completed in the third quarter.

Total billing revenues are slightly lower than budgeted due to changes that have occurred to assumptions originally used to build the stormwater charge.

Stormwater Operations expenditures before Lifecycle Contributions were $3.1

million less than budgeted.



Maintenance and Installation Cost 4.0 2.5 1.5 37.5%

General Administration 4.0 2.8 1.2 30.0%

Joint Service Costs 0.5 0.1 0.4 80.0%

Lifecycle Contribution 1.2 4.1 (2.9) (241.6%)

9.7 9.5 0.2 2.1%

Maintenance and Installation costs were lower by 37.5% due to lower than expected

street sweeping activities. A new CCTV contract was awarded in October and most

of the work will start at the beginning of 2019. The CCTV work for capital program is

yet to be scheduled. Also contributing to the positive variance are the lower than

expected repair activities.

General Administration costs were lower by 30% mainly due to deferral of debenture

payment, timing of spending in professional fees and gapping associated to a

temporary vacancy.

City’s net lifecycle contribution was $2.9 million higher than budgeted at the end of the fourth quarter due to lower than expected expenditures.

Capital Budget Results

As at December 31, 2018, there were 642 open capital projects with $265 million of available budget remaining. The open projects were made up of 528 active projects and 116 inactive projects. The open project unspent funding breakdown by year is illustrated in Chart 2 below. Further information about the inactive projects can be found in the next section of the report.

During 2018, $131 million was spent on 348 open capital projects. By comparison, the 2017 and 2016 capital project spending were $110 million and $77 million respectively. Chart 3 below illustrates the breakdown of funds spent by project category during 2018.

78

15

34

63

7

11

3

1

6

3

6

16

6

4

5

6

2018

2017

2016

2015

2014

2013

2009-2012

2008 and Older

S Millions

Chart 2 - Unspent Capital Funding by Project Status as of December 31, 2018

Active Inactive

In the 2018 Budget, departments indicated that $157 million in capital expenditures would be processed throughout 2018. At the end of 2018, approximately 84 percent of the forecasted amount was spent. Departments are continuing to enhance the robustness of their capital cash flow spend forecasts which will improve tracking of future results. The following projects were considered substantially completed as of December 31, 2018 with budget overages as permitted under Section 8 of the Capital Project Financial Administration and Reporting policy.

Project # & Title Budget Actual Variance ($)

Variance (%)

BF-8588-17 Various Community Centres - Roof Repairs & Replacement

123,600 126,165 (2,565) -2%

BU-2551-18 Growth Related Financial Analysis and Long Range Fiscal Planning

173,667 181,499 (7,832) -5%

EN-1965-14 Sidewalk and Street Lighting on Major Mackenzie Drive by York Region

927,000 929,594 (2,594) -0%

A complete list of open projects can be found online.

Inactive Projects and Closed Projects

Of the 642 open capital projects, there are 116 projects that are considered inactive.

Inactive projects comprise 18 percent of the total number of open projects, equating to 20

percent of the $265 million in unspent funds. Approximately two thirds of the inactive

Facilities31%

Fire3%

Libraries4%

Parks19%

Roads & Bridges12%

Studies & Technology

5%

Tree Canopy2%

Vehicles & Equipment

2%

Water, Wastewater, Stormwater

22%

Chart 3 - 2018 Capital Expenditures byProject Category

http://www.vaughan.ca/cityhall/capital_budget_capital_accounting_and_grants/Pages/default.aspx

projects are substantially complete but are required to remain open until a future event

occurs, while one third of the inactive projects are on hold or have not started for a variety

of reasons such as project scope and estimated costs being reevaluated, project

reprioritization, and insufficient resources to advance the project. The breakdown of the

classification of the 116 open inactive projects is as follows:

Classification Number of Projects Amount ($million)

Completed - to be closed 26 $8.8 Completed - Under Warranty or Maintenance 35 $6.5 Completed - Waiting for final invoices 8 $3.4 DC repayment in place 28 $30.3 In-progress 3 $0.7 Not Started 5 $1.8 Project on Hold 11 $1.5

Grand Totals 116 $53.0

Of the total $53.0 million in unspent funds from inactive projects, $30.3 million (representing 57%) is held for projects that have development charge repayment agreements in place and will be paid out and closed in accordance with those agreements. Staff continue to review the status of projects on hold and projects deferred, and accordingly will develop action plans to return funding commitments back to the funding sources, to repurpose the project scope, or to advance the project.

A complete list of Inactive Projects can be found online.

Departments closed 160 projects in 2018, returning $27.2 million to Reserves

During the fourth quarter, departments closed 48 capital projects, bringing the total capital projects closed in 2018 to 160 projects. The table below provides a breakdown of projects closed during 2018.

Portfolios

Number of Projects

Closed in 2018

Amount Returned to

Reserve ($ million)

Planning and Growth Management 28 $12.7

Public Works 54 $11.2

Community Services 56 $2.9

Library Services 6 $0.1

Office Chief Information Officer 1 $0.1

Corporate Services 1 $0.1

Office Corp. Initiatives and Intergov. Relations 1 -

Human Resources & Legal Services 6 -

Office Chief Financial Officer 2 -

Office Transformation and Strategy 5 -

Grand Total 160 $27.2

A complete list of Closed Projects can be found online.



Capital Budget Amendments

For capital projects where a budget amendment is required, departments are required to bring a report to Finance, Administration and Audit Committee outlining the request for the amendment.

The following table summarizes the budget amendments that were processed during the fourth quarter.

From To

Supporting

Document/Report Amount

DT-7121-13 VMC Edgeley Pond

DE-7175-17 Edgeley

Pond and Park

Construction

April 11, 2018,

FAA R4 I7 $1,179,538.27

Debenture Financing RP-2058-15 LED

Streetlight Conversion

June 19, 2018,

FAA R6 I18 $9,980,000.00

Capital Transfers Authorized by the Chief Financial Officer/City Treasurer

As outlined in the section above, Operating Transfers Authorized by the Chief Financial Officer/City Treasurer, the Chief Financial Officer/City Treasurer has the delegated authority to approve any operating or capital realignments between departments, provided they are fiscally neutral. A summary of these changes is incorporated into the quarterly reporting process.

The following capital transfers were authorized by the CFO during the fourth quarter.

From To Amount

BF-8512-17 Al Palladini CC – Exterior

Concrete Removal & Replacement

BF-8339-12 Maple CC – Arena

Walls Siding $17,024.00

BF-8437-15 Bathurst Clark Library –

Parking Lot Redesign & Resurface

ID-2042-17 Bathurst Clark Library –

Main Entrance Improvements $385,185.75

CM-2526-16 Service Excellence Strategic

Initiatives SE-0083-16 Staff Forum $35,000.00

CM-2526-16 Service Excellence Strategic

Initiatives

SP-0017-18 Citizen Engagement

Study $382.44

DE-7189-18 Hwy 7 and Weston Road

Secondary Plan Comprehensive Study

DE-7141-16 Transportation Master

Plan Update $300,000.00

EN-1756-09 Sidewalk Construction

Program

DP-9542-15 Islington Ave

Streetscape Phase 1 Construction $100,000.00

EV-2106-17 – PW Portable Water Trailer

Purchase

FL-5467-14 PW – Water – Replace

Unit 1639 w/ ¾ Ton Cargo Van $1,393.63

FL-5531-14 PW – Water – 2 Pickup

Trucks and 2 SUVs




Purchase




Purchase



FL-5531-14 PW – Water – 2 Pickup

Trucks and 2 SUVs



FL-5532-17 PW – Water – Backflow

Prevention Coordinator Vehicle



PK-6501-16 Vaughan Crest Park –

Tennis Court Reconstruction

PK-6322-14 Rose Mandarino Park

– Basketball Court Reconstruction $32,000.00

PK-6501-16 Vaughan Crest Park –

Tennis Court Reconstruction

PK-6562-17 Basketball Court

Improvements – Various Locations $35,000.00

PO-6709-10 SWM Pond Life Saving

Stations (Phase IV) PW-2066-14 Yard Weigh Scale $7,000.00

RE-9531-16 Recreation and Culture

Customer Service Review & Plan RE-9527-18 Events Strategy $7,000.00

Continuity Schedule of Reserves and Reserve Funds

$ million Opening Balance Revenues Expenses

Closing Balance Before Commitments Commitments

Closing Balance After Commitments

Obligatory Reserves City-Wide Development Charges 287.9 246.7 50.3 484.3 108.8 375.4

Area Specific Development Charges 1.9 1.4 (5.5) 8.8 15.4 (6.6)

Restricted Grant 27.8 10.9 8.6 30.1 27.9 2.3

Other 91.2 27.2 24.6 93.8 3.1 90.7

Obligatory Subtotal 408.9 286.2 78.0 617.0 155.2 461.8

Discretionary Reserves

Infrastructure 193.2 51.7 28.5 216.4 37.1 179.3

Capital from Taxation 17.2 7.9 6.5 18.6 14.8 3.9

Corporate 15.1 2.5 0.3 17.4 0.1 17.3

Special Purpose 7.0 0.3 0.3 7.1 12.9 (5.8)

Sustainability 41.8 9.1 8.2 42.7 0.2 42.5

Discretionary Subtotal 274.4 71.6 43.8 302.2 65.1 237.1

Grand Totals $683.3 $357.8 $121.8 $919.2 $220.3 $698.9

Note – numbers may not add due to rounding.

At the end of 2018, the reserve balance before commitments was $919 million. A net reserve activity of $220 million is committed against these reserves and reserve funds; after this activity is accounted for, the total reserves and reserve funds balances as of December 31, 2018 was close to $700 million, of which $462 million was for obligatory reserves and $237 million was in discretionary reserves.

Development Charges collected in 2018 equated to $240 million. Approximately $185 million was collected from residential developments and approximately $55 million was collected from non-residential developments. As part of the 2018 DC By-laws review, Council authorized delegated authority to the City Treasurer and City Solicitor to execute Development Charge Pre-Payment Agreements under Section 27 of the Development Charge Act. The City collected approximately $175 million in DCs in the third quarter of 2018, of which $167 million were directly related to the DC prepayment agreements. The City’s draft Development Charge Fund Statement is expected to be presented to Council in June 2018.

The City contributed approximately $46 million into various infrastructure reserves to fund future assets’ state of good repair, of which close to $14 million was contributed from taxation and approximately $32 million was from rate supported revenues. The City is currently on its journey to develop a comprehensive asset management plan that will be rolling out into various phases. The Corporate Asset Management Strategic Policies were approved by Council in early 2019, the next phase of the journey includes activities to

improve asset management planning with accompanying strategies to establish mechanism to promote principle and evidence-based decision making. Asset management plans will inform future infrastructure planning and support asset management related budget and spending decisions.

The Detailed Reserve Continuity Schedule can be found online.

Financial Ratios in alignment with Corporate Targets

Discretionary reserves provide the City with financial flexibility in order to safeguard against economic downturns and finance operations internally. To ensure the sustainability of these reserves, the City has adopted associated targets. The City also has a target ratio for debt services costs. The table below provides the status of these targets at the end of 2018.

Policy Ratio 2018 2017 Target

Discretionary Reserve 65% 65% >50% Of Own Source Revenues

Working Capital 9% 8% Up To 10% Of Own Source Revenues (tax only)

Debt Service 2% 2% <10% Of Own Source Revenues

Discretionary Reserve Ratio - The greatest pressure on discretionary reserves is largely

due to funding infrastructure replacement as the City’s initial stock of infrastructure assets

begin to reach the end of their useful lives.

Working Capital Ratio – Contributions to Working Capital Reserve occur when the City

achieves a surplus; this reserve can be a source of funding to address a year-end deficit

position. In 2018, the operating surplus from taxation was transferred to this reserve. The

calculated ratio of 6% include the year-end balance of the Tax Rate Stabilization Reserve;

the consideration of consolidating the Working Capital Reserve and the Tax Rate

Stabilization Reserve will be analyzed and discussed in an upcoming reserve policy

review.

Debt Service Ratio - The City’s policy limits debt to a maximum of 10 percent of total

City revenue, which is significantly lower than the Province's 25 per cent maximum. Total

debenture outstanding principal as of December 31, 2018 was approximately $29 million

(2017 - $36 million). In 2018 the total debt repayment costs were $7.5 million (2017 - $9

million), $6.6 million in principal and $0.9 million in interest. Repayment costs of $7.5

million represents approximately 2 percent of the City’s own source revenues. The Debt

Service Ratio continued to improve in 2018, this was achieved in part by looking for

responsible and innovative ways to fund capital projects. It is worth noting however, that

when debt financing can be an additional funding tool to finance infrastructures in the

City, due diligence is necessary to ensure the City’s long-term financial sustainability and

flexibility.


The City is working to complete a long-term fiscal plan that would take into consideration

the City’s Term of Council strategic plan, growth plans, asset management plan,

development charge study, and its treasury management strategy. A Reserve Policy and

a Debt Management Policy review would be complimenting this long-term fiscal plan

which include review of some key financial indicators; the resulting analysis and

recommendation would be considered in the City’s multi-year financial plan and to ensure

financial decisions are mindful of short-term and long-term financial impacts from the

City’s growth and the City’s desired levels of services.

Grant Activity Update In 2018, the City received approximately $25.5 million in grant revenues inclusive of the City’s Gas Tax revenue of $9.2 million. The table below summarizes the grants revenues received in 2018. These figures exclude the Federal Gas Tax received in 2018.

Grant Capital

Grants

Operating

Grants

Canada 150 Community Infrastructure Program 960,712

Clean Water and Wastewater Fund 13,238,086

Municipal Asset Management Program (MAMP) 50,000

Age Friendly Grant 20,215

All our Kids (AOK) 9,346

Canada 150 Celebrate Canada Fund 1,263

Canada Summer Jobs 30,033

Canadian Heritage 2,268

Celebrate Canada 19,430

IESO Embedded Energy Manager Program 80,000

Ontario Libraries Capacity Fund-Information Technology Service Capacity 36,135

Public Library Operating, Pay Equity and First Nations Salary Supplement Grant 143,234

Resource Productivity and Recovery Authority 1,209,142

Safe Cycling Education Fund (SCEF) 7,500

VBEC - Core Funding 158,396

VBEC - Summer Company 61,610

VBEC Starter Company Plus 247,500

Young Canada Works in Heritage Organizations program 14,090

Total by Grant Type 14,248,798 2,040,161

Total Grants Received in 2018 16,288,959

Approximately $1 million fund was received from the Canada 150 Infrastructure Program

in 2018. Projects include Rehabilitation of Oak Bank Pond, Improvement of Matthew Park,

Improvement of North Thornhill District Park, Expansion of Maxey Park Playground,

Renovation of Vellore Village Community Centre/ Dufferin Clark Community

Centre/Father Ermanno Community Centre and Woodbridge Arena

The City received funding approval of $21 million from the Clean Water and Wastewater

Fund in 2017. This grant funding was planned to help offset costs for thirty-four (34)

projects applied for, more notably including: VMC Edgeley Pond and Park, Centre Street

Watermain Replacement, Stegman’s Mill Watermain Replacement, Andrew

Park/Button/Marilyn Place/ North Humber Road Watermain Replacement, Clarence

Street Slope Stabilization, watermain condition assessments and various water metering

related programs. Completion of these projects is essential to keeping our communities

safe, healthy and livable. A task force was formed to facilitate a collaborative effort

amongst various city departments and to address action items in a timely and appropriate

manner. In 2018 the Task Force worked with Federal government and obtained a funding

reallocation and scope expansion approval which provided the City with an opportunity to

maximize potential grant funding. CWWF projects are progressing in accordance with the

projects scheduled timelines; throughout 2018 five expense claims amounted to $17

million were submitted to Infrastructure Ontario for process and $13 million were received

in 2018.

In 2018 the Government of Canada launched the Disaster Mitigation and Adaptation Fund

(DMAF), a national merit-based program that will invest $2 billion to support large-scale

infrastructure projects to help communities better manage the risks of disasters triggered

by natural hazards. DMAF projects will support the Government of Canada's objectives

laid out in the Pan-Canadian Framework on Clean Growth and Climate Change. Given

the significant funding potential and the DMAF’s long term positive impact on our

community, the Corporate Leadership Team responded to this opportunity strategically

including advocacy effort through strategic alignment of the Federal government’s

mandate and Vaughan’s strategic priorities and prioritizing potential candidate programs

for grant application submission. In March 2019, funding of $16 million was approved in

principle for City’s “From Average to Awesome – Implementation Vaughan Stormwater

Flood Mitigation Project”. The approved fund will help offset a portion of the costs, already

committed to improve water quality of the creek system and minimize erosion and flooding

of areas that currently have no or limited stormwater controls in urbanized areas of

Vaughan.


Not applicable.

Conclusion

The report is consistent with the priorities set in the Service Excellence Strategic

Initiatives under Operational Performance: Financial Sustainability.

The City’s property tax supported operations ended 2018 in a surplus financial position

of $2.9 million, of which $0.5 million was transferred to the Year-End Expenditure Reserve

and $2.9 million was transferred to the Working Capital Reserve, consistent with the

Consolidated Reserve Policy.

Combined, the water, wastewater and stormwater rate supported operations ended 2018

in a favourable position of $15.3 million, resulting in a transfer to the infrastructure

reserves that support these activities.

During 2018, approximately $131 million was spent on 348 capital projects. Departments

closed a total of 160 capital projects in 2018 and savings of $27.2 million from the closed

projects were returned to various reserves and reserve funds.

The City is working to complete a long-term fiscal planning model that would take into

consideration the City’s 2019-2022 Term of Council strategic plan, growth plans, asset

management plan, development charge study, and its treasury management strategy.

The resulting model would be used to provide advice to Council on recommended funding

strategies, spending capacities, tax levy implications and the City’s financial resiliency;

and would help ensure that as the City continues to grow and intensify, the City remains

financially sustainable over the long term.

For more information, please contact:

Michael Marchetti, Director, Financial Planning & Development Finance, Ext. 8271

Dean Ferraro, Director, Financial Services, Ext. 8272

Attachments

1. City Operating – 2018 Financial Summary

2. City Operating – Portfolio/Office Summary

Prepared by

Maggie Wang, Manager, Corporate Financial Planning & Analysis Ext. 8029

Sean Skinkle, Finance Manager, Water, Wastewater and Stormwater Ext. 8486 Greg Eleftheriou, Senior Corporate Financial Analyst, Ext. 8352

James Siu, Corporate Financial Analyst, Ext. 8066 Rita Selvaggi, Manager Financial Planning & Analysis Ext. 8438

Varant Khatchadourian, Manager Financial Planning & Analysis Ext. 8338

Attachment 1

CITY OF VAUGHAN

2018 City Operating Budget

Property Tax Based Budget

Fiscal Position as of

December 31, 2018

CITY OF VAUGHAN2018 City Operating Budget

Fiscal Position as of December 31, 2018

2018

ANNUALBUDGET $ %

TAXATION 191,650,052 191,650,052 191,494,008 -156,044 -0.1%

SUPPLEMENTAL TAXATION 3,200,000 3,200,000 4,029,315 829,315 25.9%

GRANT / PAYMENT IN LIEU 2,725,200 2,725,200 2,800,503 75,303 2.8%

RESERVES AND OTHER TRANSFERS 18,304,415 18,304,415 15,315,222 -2,989,193 -16.3%

FEES AND SERVICE CHARGES 56,308,935 56,308,935 52,652,613 -3,656,322 -6.5%

CORPORATE 20,329,735 20,329,735 24,180,850 3,851,115 18.9%

TOTAL REVENUES 292,518,337 292,518,337 290,472,511 -2,045,826 -0.7%

EXPENDITURES:

DEPARTMENTAL 263,509,237 263,509,237 254,151,214 9,358,023 3.6%Other Reserves RESERVE CONTRIB. & CORP. EXP. 10,316,395 10,316,395 18,208,669 -7,892,274 -76.5%

LONG TERM DEBT 9,921,368 9,921,368 9,921,368 0 0.0%

CONTINGENCY 1,542,199 1,542,199 642,122 900,077 58.4%

CAPITAL FROM TAXATION 7,229,138 7,229,138 7,549,138 -320,000 -4.4%

TOTAL EXPENDITURES 292,518,337 292,518,337 290,472,511 2,045,826 0.7%

EXCESS OF REVENUES OVER EXPENDITURES 0 0 0 0

Note: The total expenditures include

year end reserve transfers of approximately $0.8 million

REVENUE / EXPENDITURE SUMMARY

FAV. / (UNFAV.)BUDGET ACTUAL

2018 YTD VARIANCE

2018ANNUALBUDGET $ %

TAXATIONTax Levy 191,650,052 191,650,052 191,494,008 -156,044 -0.1%Supplementals 3,200,000 3,200,000 4,029,315 829,315 25.9%

GRANTLibrary Grant 145,200 145,200 209,344 64,144 44.2%

PAYMENT IN LIEU / OTHERPayment In Lieu / Other 2,580,000 2,580,000 2,591,159 11,159 0.4%

RESERVES AND OTHER TRANSFERSEngineering Reserve 8,769,988 8,769,988 6,758,197 -2,011,791 -22.9%Election Cost 1,200,000 1,200,000 917,090 -282,910 -23.6%CIL Recreation Land Reserve 1,281,000 1,281,000 1,281,000 0 0.0%Administrative Recovery from Capital 1,500,000 1,500,000 3,434,758 1,934,758 129.0%Building Standards Service Continuity Reserve 3,749,215 3,749,215 2,740,276 -1,008,939 -26.9%Tax Rate Stabilization Reserve 1,289,948 1,289,948 0 -1,289,948 -100.0%Other Reserves 514,264 514,264 183,901 -330,363 -64.2%

0 0 0.00%TOTAL RESERVES 18,304,415 18,304,415 15,315,222 -2,989,193 -16.3%

CITY MANAGER 0 0 0 0 0.00%

TOTAL OFFICE OF CHIEF CORPORATE INITIATIVES & INTERGOV. RELATIONS 88,725 88,725 56,449 -32,276 0.0%

OFFICE OF TRANSFORMATION & STRATEGY 141,732 141,732 316,738 175,006 123.5%

Chief Human Resources Officer 0 0 263 263 0.00%Chief Information Officer 263,064 263,064 1,472 -261,592 -99.4%Office of the City Clerk - Clerks 1,539,278 1,539,278 1,085,330 -453,948 -29.5%

TOTAL DEPUTY CITY MANAGER CORPORATE SERVICES 1,802,342 1,802,342 1,087,065 -715,277 -39.7%

Financial Services 1,097,445 1,097,445 1,298,515 201,070 18.3%Financial Planning & Development Finance 518,517 518,517 377,736 -140,781 -27.2%Procurement Services 58,200 58,200 106,376 48,176 82.8%

TOTAL OFFICE OF THE CFO/CITY TREASURER 1,674,162 1,674,162 1,782,627 108,465 6.5%

OFFICE OF THE CITY SOLICITOR 841,406 841,406 176,146 -665,260 -79.1%

Recreation Services 18,739,484 18,739,484 19,439,029 699,545 3.7%Community Development & Events 700,000 700,000 895,629 195,629 27.9%Facility Services 561,922 561,922 557,975 -3,947 -0.7%Fire And Rescue Services 1,007,298 1,007,298 1,017,866 10,568 1.0%By-Law, Compliance, Licensing and Permits 4,135,982 4,135,982 4,591,160 455,178 11.0%

TOTAL DEPUTY CITY MANAGER COMMUNITY SERVICES 25,144,686 25,144,686 26,501,659 1,356,973 5.4%

Development Planning 8,746,833 8,746,833 6,976,116 -1,770,718 -20.2%Development Engineering 499,209 499,209 402,151 -97,058 -19.4%Policy Planning & Environmental Sustainability 760,466 760,466 342,484 -417,982 -55.0%Parks Development 453,453 453,453 219,871 -233,582 -51.5%Building Standards - Licenses/Permits 9,372,538 9,372,538 9,349,167 -23,371 -0.2% - Plumbing Permits 786,532 786,532 763,487 -23,045 -2.9% - Service Charges 778,177 778,177 833,103 54,926 7.1%

TOTAL DEPUTY CITY MANAGER PLANNING & GROWTH MANAGEMENT 21,397,208 21,397,208 18,886,378 -2,510,830 -11.7%

Infrastructure Planning and Corporate Asset Management 1,305,756 1,305,756 710,952 -594,804 -45.6%Infrastructure Delivery 1,208,803 1,208,803 661,005 -547,798 -45.3%Environmental Services 1,472,464 1,472,464 1,457,144 -15,320 -1.0%Trans Serv and Parks & Forestry Ops 804,301 804,301 633,970 -170,331 -21.2%

TOTAL DEPUTY CITY MANAGER PUBLIC WORKS 4,791,324 4,791,324 3,463,071 -1,328,253 -27.7%

VAUGHAN PUBLIC LIBRARIES 427,350 427,350 382,479 -44,871 -10.5%

TOTAL FEES / SERVICE CHARGES 56,308,935 56,308,935 52,652,613 -3,656,322 -6.5%

TOTAL CORPORATE REVENUES 20,329,735 20,329,735 24,180,850 3,851,115 18.9%

TOTAL REVENUE 292,518,337 292,518,337 290,472,511 -2,045,826 -0.7%

FAV. / (UNFAV.)BUDGET ACTUAL


Fiscal Position as of December 31, 2018December 31, 2018

REVENUE BY MAJOR SOURCE

2018 YTD VARIANCE

2018

ANNUALBUDGET $ %

COUNCIL 1,729,291 1,729,291 1,492,996 236,295 13.7%

OFFICE OF THE INTEGRITY COMMISSIONER 509,944 509,944 419,084 90,860 17.8%

INTERNAL AUDIT 690,746 690,746 607,851 82,895 12.0%

CITY MANAGER 608,108 608,108 361,968 246,140 40.5%

Corporate and Strategic Communications 1,390,469 1,390,469 1,489,481 -99,012 -7.1%Economic & Cultural Development 2,129,475 2,129,475 1,976,077 153,398 7.2%Office of the Chief Corporate Initiatives & Intergov Relations 860,557 860,557 606,029 254,528 29.6%

OFFICE OF THE CHIEF CORPORATE INITIATIVES & INTERGOV. RELATIONS 4,380,501 4,380,501 4,071,587 308,914 29.7%

OFFICE OF TRANSFORMATION & STRATEGY 853,029 853,029 1,028,035 -175,006 -20.5%

Office of the Chief Financial Officer/City Treasurer 555,189 555,189 500,729 54,460 9.8%Financial Services 3,883,015 3,883,015 3,323,968 559,047 14.4%Financial Planning & Development Finance 3,802,696 3,802,696 3,162,766 639,930 16.8%Procurement Services 2,666,366 2,666,366 2,083,515 582,851 21.9%

TOTAL OFFICE OF THE CFO/CITY TREASURER 10,907,266 10,907,266 9,070,977 1,836,289 16.8%

TOTAL OFFICE OF THE CITY SOLICITOR 4,517,628 4,517,628 3,720,150 797,478 17.7%Other ReservesOffice of the Deputy City Manager Corporate Services 716,013 716,013 378,853 337,160 47.1%Office of the Chief Human Resources Officer 3,489,753 3,489,753 3,745,177 -255,424 -7.3%Office of the Chief Information Officer 12,091,628 12,091,628 11,931,966 159,662 1.3%Office of the City Clerk 12,296,512 12,296,512 11,827,820 468,692 3.8%

TOTAL DEPUTY CITY MANAGER CORPORATE SERVICES 28,593,906 28,593,906 27,883,817 710,089 2.5%

Office of Deputy City Manager Community Services 616,510 616,510 581,015 35,495 5.8%Community Grants & Advisory Committees 45,004 45,004 38,861 6,143 13.7%Access Vaughan 1,280,368 1,280,368 1,267,915 12,453 1.0%Recreation Services 28,554,733 28,554,733 28,813,880 -259,147 -0.9%Community Development & Events 1,910,649 1,910,649 1,954,919 -44,270 -2.3%Facility Services 14,576,030 14,576,030 14,755,656 -179,626 -1.2%Fire and Rescue Services 50,148,529 50,148,529 51,408,448 -1,259,919 -2.5%Emergency Planning 224,621 224,621 230,021 -5,400 -2.4%By-Law, Compliance, Licensing & Permits 7,775,980 7,775,980 7,169,061 606,919 7.8%

TOTAL DEPUTY CITY MANAGER COMMUNITY SERVICES 105,132,424 105,132,424 106,219,776 -1,087,352 -1.0%

Office of Deputy City Manager Planning & Growth Management 587,089 587,089 565,700 21,389 3.6%Development Planning 5,444,394 5,444,394 4,461,587 982,807 18.1%Development Engineering 5,314,809 5,314,809 4,226,765 1,088,044 20.5%Policy Planning & Environmental Sustainability 2,659,853 2,659,853 2,386,917 272,936 10.3%Parks Development 2,367,364 2,367,364 2,278,927 88,437 3.7%Building Standards 9,947,112 9,947,112 9,295,533 651,579 6.6%

TOTAL DEPUTY CITY MANAGER PLANNING & GROWTH MANAGEMENT 26,320,621 26,320,621 23,215,430 3,105,191 11.8%

Office of Deputy City Manager Public Works 513,561 513,561 573,860 -60,299 -11.7%Infrastructure Planning and Corporate Asset Management 2,772,881 2,772,881 2,174,620 598,261 21.6%Fleet Management 3,249,303 3,249,303 3,081,945 167,358 5.2%Infrastructure Delivery 3,516,984 3,516,984 2,856,646 660,338 18.8%Environmental Services 10,554,981 10,554,981 10,301,302 253,679 2.4%Trans Serv and Parks & Forestry Ops 39,500,588 39,500,588 38,600,273 900,315 2.3%

60,108,298 60,108,298 57,588,647 2,519,651 4.2%

VAUGHAN PUBLIC LIBRARIES 19,157,475 19,157,475 18,470,896 686,579 3.6%

TOTAL DEPARTMENTAL EXPENDITURES 263,509,237 263,509,237 254,151,214 9,358,023 3.6%

RESERVE CONTRIBUTIONS & CORP. EXP. 10,316,395 10,316,395 18,208,669 -7,892,274 -76.5%

LONG TERM DEBT 9,921,368 9,921,368 9,921,368 0 0.0%

CONTINGENCY 1,542,199 1,542,199 642,122 900,077 58.4%

CAPITAL FROM TAXATION 7,229,138 7,229,138 7,549,138 -320,000 -4%

TOTAL DEPARTMENTAL AND CORPORATE EXPENDITURES 292,518,337 292,518,337 290,472,511 2,045,826 0.7%

TOTAL DEPUTY CITY MANAGER PUBLIC WORKS

2018 YTD VARIANCE

BUDGET ACTUAL FAV. / (UNFAV.)


December 31, 2018

DEPARTMENTAL EXPENDITURES BY MAJOR CATEGORY

2018 Q4 Fiscal Health Report Attachment 2

Portfolio: Community Services

Operating Results ($M):

($M) Budget Actual Variance

Revenues 25.14 26.50 1.36

Labour 85.11 85.86 (0.75)

Other Expenditures 20.03 20.36 (0.33)

Total Expenditures 105.13 106.22 (1.08)

Net 79.99 79.72 0.27

Capital Results ($M):

Year ($M) Open Unspent

# $

2018 35 9.99

2017 36 (22.68)

2016 19 2.60

2015 8 2.56

2014 11 0.58

2004-2013 11 0.81

Total 120 ($6.15)

Community Services has a favourable variance at Q4 driven mainly by:

• Greater than anticipated revenues from program registrations and sponsorship revenues generated from City-wide events (Recreation Services)

• Greater than expected revenue due to an increase in fines & penalties and license fees (By-Law & Compliance, Licensing & Permit Services)

• Lower than budgeted hydro costs due to energy saving initiatives and lower gas costs from reduced consumption (Facility Services)

• Lower than budgeted labour expenditures as a result of vacancies (By-Law & Compliance, Licensing & Permit Services)

These were partially offset by higher than budgeted expenditures in:

• Overtime for coverage of long-term absences (Fire and Rescue Service)

• Vehicle repair expenses due to major engine repairs on fire trucks (Fire and Rescue Service)

• Part-time staffing required to support higher program registrations (Recreation Services)

• General Maintenance due to emergency repairs (Facility Services)

Work continued in Q4 on numerous capital projects including implementation of energy conservation improvements to multiple City-owned facilities, as well as renovations and replacements at the City’s Community Centres.

There were 28 project closures across Community Services during the quarter.

2018 Q4 Fiscal Health Report

Portfolio: Corporate Services



Revenues 1.80 1.09 (0.72)

Labour 16.35 15.57 0.78


Total Expenditures 28.59 27.88 0.71

Net 26.80 26.79 0.01



# $

2018 2 0.25

2017 2 0.70

2016 7 1.56

2014 1 0.34

Total 12 $3.86

Corporate Services’ has a favourable variance at Q4 driven mainly by: • Lower than budgeted labour costs as a result of vacancies during the year. • Lower negotiated Insurance Premiums and Deductibles (Office of the City Clerk) • Deferred office space renovations (Deputy City Manager Corporate Services and Office of the Chief Human Resources Officer) • Lower than anticipated spending on Professional Fees and Computer Software due to timing of approvals for projects (Office of the Chief Information Officer) These were partially offset by higher than budgeted expenditures in:

• Communications (Office of the Chief Information Officer),

• Professional Fees for legal and human resources’ related issues (Office of the Chief Human Resources Officer), and

• internal and external city claims (Office of the City Clerk).

Work continued in Q4 on several large ongoing capital projects such as Central Computing Infrastructure, Personal Computer (PC) Assets Renewal and Audio/Visual Infrastructure renewal. (Office of the Chief Information Officer). For Q4, the project to enhance the City’s agenda management system is substantially complete (Office of the City Clerk).


Portfolio: Planning and Growth Management



Revenues 21.40 18.89 (2.51)

Labour 25.02 22.10 2.91

Other Expenditures 1.30 1.11 0.19


Net 4.92 4.33 0.59



# $

2018 34 19.41

2017 30 14.94

2016 27 14.03

2015 24 21.74

2014 19 2.35

2013 19 7.64

2011-2012 20 4.48

2003-2010 21 9.00

Total 194 $93.61

Planning and Growth Management has an overall positive operating variance for the year driven mainly by:

• Revenues that were below budget due to 1) the deferral of Development Planning fees received in 2018 for applications to be reviewed in 2019, and 2) lower than budgeted labour cost recoveries from capital funds due to vacancies in Parks Development, Policy Planning & Environmental Sustainability and Development Planning.

• A positive labour variance attributed mainly to vacancies and timing in recruitment in Building Standards, Development Engineering, Development Planning and Policy Planning & Environmental Sustainability. The positions are being actively recruited. The positive labour variance contributed to the lower than expected labour cost recoveries from capital funds.

Work progressed on open capital projects with some of the more significant expenditures in the year related to North Maple Regional Park Phase I construction, Block 41 Chatfield District Park Construction and Block 55 PD-KN Watermain Servicing.

There was a total of 23 projects closed during the year.


Portfolio: Public Works



Revenues 4.79 3.46 (1.33)

Labour 28.13 27.60 0.54



Net 55.32 54.13 1.19



# $

2018 65 53.28

2017 67 25.00

2016 31 20.84

2015 41 54.27

2014 42 7.60

2007-2013 42 7.51

Total 288 $168.52

The overall positive operating budget variance within the Public Works Portfolio was mainly driven by:

• Lower than budgeted revenues, mainly due to lower labour recoveries from capital funds as a result of vacancies in the year. This was offset by a favourable variance in labour. The vacant positions have since been filled or are currently in recruitment.

• Savings in contract & contractor materials in the Transportation Services and Parks and Forestry Operations (TSPFO) department as a result of bringing work in-house. This was partly offset by higher than budgeted cost in part-time labour to execute these works internally.

• Lower than budgeted utility costs as a result of less than expected rate increases for hydro.

Work progressed on open capital projects during 2018 with some of the more significant expenditures in the year related to:

• Public Works Operation Yards upgrade and expansion

• Road rehabilitation and Watermain replacement

• Vaughan Hospital Precinct Development

• Kleinburg United Church Renovation

• New Vellore Village Community Library

• Fire Station 7-4 Reposition

• VMC Edgeley Pond Construction

• Tree plantings

A number of projects were completed and closed during the year in Infrastructure Delivery, Fleet Management Services, Environmental Services and TSPFO. Some of the works completed during the year related to:

• Portage Parkway Extension

• Sidewalk Construction on Regional Roads

• North Thornhill Branch Library (Block 10)

• Keele Street Watermain Relocation - Design

• North Maple Bridge - north of Major Mackenzie over Hwy 400

• Al Palladini CC-Roof Replacement


Office: Corporate Initiatives and Intergovernmental Relations



Revenues 0.09 0.01 (0.08)

Labour 3.69 3.45 0.24



Net 4.29 4.06 0.23


Office: Chief Financial Officer



Revenues 1.67 1.78 0.11

Labour 10.52 8.89 1.63



Net 9.23 7.29 1.94



# $

2018 4 0.37

2017 1 0.39

2016 1 0.09

2011 1 0.09

Total 8 $0.94


# $

2017 1 0.10

Total 1 $0.10

Corporate Initiatives and Intergovernmental Relations has a favourable variance at Q4 driven mainly by lower than budgeted labour expenditures as a result of vacancies.

Work continued in Q4 on various capital projects, including Economic Development & Employment Strategy (EDES Study).

The Office of Chief Financial Officer has a favourable variance at Q4 driven mainly by higher than budgeted taxation and property assessment revenues and labour savings due to vacancies.

Work continued in Q4 on various capital projects, including Growth Related Financial Analysis and Long-Range Fiscal Planning.


Office: Chief Financial Officer – Corporate Revenues & Expenditures



Corporate Revenue 20.34 24.18 3.85

Reserve & Other Transfers 18.30 15.32 (2.99)

Taxation (net) 197.58 198.32 0.75

Total Revenues 236.21 237.82 1.61

Corporate Expenditures 19.09 24.00 (4.92)

Long Term Debt 9.92 9.92 0.00


Net (207.2) (203.9) (3.31)

Office: City Solicitor



Revenues 0.84 0.18 (0.67)

Labour 3.87 0.49 3.37



Net 3.68 0.54 3.14



# $

2018 1 0.00

2013 1 0.03

2012 1 1.16

Total 3 $1.19

Net results are tracking negative to budget driven mainly by: • Lower than budgeted transfers from the Engineering and Building Standards Reserves as their overall department expenditures were less than planned in 2018, as these department expenditures were less than planned in 2018. • Higher than budgeted Corporate Revenues, mainly attributable to revenue recognition timing differences caused by a transition from annual dividend declaration to a quarterly based divided declaration from the City’s investment holding company, Vaughan Holdings Inc. (VHI). The 2017 fourth quarter dividend was declared and received in 2018. • Taxation revenues came in higher than budget which was mainly due to higher than anticipated supplemental taxation revenue. • Corporate expenditures are higher than budget as it included corporate labour gapping.

The Office of the City Solicitor has an unfavourable variance at Q4 driven mainly by higher than budgeted spending in Professional Fees for complex legal issues and Local Planning Appeal Tribunal hearings that required external counsel expertise.

These were partially offset by lower than budgeted labour expenditures as a result of vacancies. The positive labour variance was offset by lower than budgeted revenues as a result of lower than anticipated labour recovery from capital projects. The majority of capital project activity is related to real estate; specifically land acquisition activities which can result in varied spending from quarter to quarter.


Office: Transformation & Strategy



Revenues 0.14 0.32 0.18

Labour 0.77 0.75 0.02



Net 0.71 0.71 0.00



# $

2017 1 0.21

2016 1 0.39

Total 2 0.60

Office: Vaughan Public Libraries



Revenues 0.43 0.38 (0.04)

Labour 14.45 13.80 0.65



Net 18.73 18.09 0.64



# $

2018 2 0.44

2016 2 0.16

2013-2015 4 1.02

Total 8 $1.62

The Office of the Transformation and Strategy would have a surplus of $250K mainly due to vacancies within the department and delayed projects on Service Excellence Initiatives. This surplus was transferred to the Year End Reserve to account for funding needs for the delayed projects to be spent and delivered in 2019.

Work continues to progress well on open capital projects.

Vaughan Public Libraries has a favourable variance at Q4 driven mainly by: • Lower than budgeted labour costs as a result of vacancies, • Reduced expenses for utilities, and • Higher than budgeted Provincial grants received for technology spend These were partially offset by increases in expenditures related to furniture refresh for Bathurst Clark Library, computer hardware and same-day courier services. Work continued in Q4 on several ongoing city-wide capital projects related to resource purchases, furniture and equipment as well as technology upgrades. In addition, furniture and equipment and communications and hardware project activity continued for Vellore Village South Library. There were 4 project closures during the quarter.


City Council



Revenues - - -

Labour 1.32 1.24 0.08



Net 1.72 1.49 0.24

Integrity Commissioner & Lobbyist Registrar



Revenues - - -

Labour 0.33 0.33 0.01



Net 0.51 0.42 0.09

Internal Audit



Revenues - - -

Labour 0.60 0.59 0.01



Net 0.69 0.61 0.08

City Manager



Revenues - - -

Labour 0.51 0.16 0.35



Net 0.61 0.36 0.25

The Integrity Commissioner net expenditure result is on budget. No material variance.

The Internal Audit operating financial result is on budget. No material variance.

The City Council net expenditure is positive to budget. No material variance.

The City Manager operating financial result is on budget. No material variance.



TITLE: SHORT-TERM RENTAL REGULATION


ACTION: DECISION

Purpose This report provides recommendations for the establishment of a regulatory regime for

“short-term rentals” (STRs), including technical amendments to the City’s Zoning By-

law, creation of a new STR Licensing by-law and a Municipal Accommodation Tax

(MAT) STR by-law.

Report Highlights A regulatory framework will place parameters around what constitutes a legal

short-term rental, ensure minimum standards are met, and require the

maintenance of a valid municipal licence.

The advent of STRs has created both a growing number of opportunities for

residents to participate in the Sharing Economy, as well as community concerns

around the impact of STRs.

Regulation will help to create a balance between the demand for STRs and the

demand for affordable housing options, while satisfying the diverse needs of

people visiting Vaughan, and continuing to support the evolution of business

models that spur economic growth.

Regulation will facilitate the application of the Municipal Accommodation Tax

(“MAT”) on STRs, which is expected to generate approximately $120,000

annually, and balances the market with respect to traditional overnight

accommodations.

Licensing fees for STRs will be established at an annual rate of $300 per property,

and for STR brokers on an incremental scale based on number of properties

managed, between $500 and $10,000; revenues will contribute to offsetting the

costs of administration and enforcement, estimated at $167,000 annually.

Recommendations 1. That the recommendations provided in Attachment 1 of this report be adopted;

and

2. That staff be authorized to undertake any other actions required to implement the

recommendations of this report, including implementing the proposed new by-

laws and making any consequential amendments to related by-laws, subject to

the approval of City Legal Services.

Background

In 2014, City Council adopted the By-law Strategy, which introduced a strategic

framework for review, creation and amendment of the City’s By-laws and related

regulatory public policies. Guided by the Strategy, staff have undertaken, and continue

to carry out, comprehensive reviews of the City’s regulatory frameworks to better

address emerging issues and protect the public interest by establishing relevant,

effective public policies that continue to support health and safety, quality of life and

well-being of our residents. Vaughan remains one of the five fastest growing City’s in

Canada and a City of choice for residents and visitors alike.

The advent of Sharing Economy business models, including ride-sharing, and food

delivery, amongst others, continue to spark commercial disruptions, displacing

incumbent industry leaders and expanding the boundaries of traditional markets. As

these technologically-driven platforms continue to increase in popularity, governments

at all levels will continue to have to innovate their regulatory approaches to ensure that

they remain relevant and suitable to today’s social and economic environment.

History of Short-Term Rentals

The renting of a home or part of a home for a short duration, and “home-sharing” where

people exchange housing accommodations while on vacation or other reasons, is not

new to the tourism industry. The advent and popularity of online platforms, such as

Airbnb, HomeAway, and VRBO (Vacation Rentals by Owner), HomeAway, Flipkey,

Homestay, Go With Oh, OneFineStay or Booking.com has contributed to the

proliferation and ease of short-term home rentals in cities across the world. This type of

rentals is now commonly referred to as “short-term rentals” (STRs) and are generally

understood to refer to private individuals renting out all or part of their residences for

short periods of time in exchange for a fee.

Staff working group

In 2018, an interdepartmental working group was created to study the impacts of STRs

and explore potential regulatory responses. This group was led by BCLPS, and

comprised of representatives from Building Standards, Economic and Cultural

Development (ECD), Corporate and Strategic Communications, Policy, Planning and

Environmental Sustainability, and Vaughan Fire and Rescue Services (VFRS)

departments. External resources such as York Regional Police (YRP) and an external

consultant were also added to the study team.

Stakeholder engagement and research

The City of Vaughan (COV) values the opinions of all citizens and stakeholders. Staff

have undertaken an extensive internal and external stakeholder engagement process to

develop a fulsome understanding of the current situation, including the challenges and

benefits associated with STRs in Vaughan.

Staff have engaged extensively with members of the public, businesses, interest groups

and STR companies. A comprehensive stakeholder mapping exercise identified the

following stakeholder groups:

Ratepayers’ Associations

Homeowners in the city of Vaughan

Renters in the city of Vaughan

The general Vaughan public

Neighbours (people living in areas/communities where short-term rentals are

being operated)

Condominium boards in the city of Vaughan

Hotel and motel owners and operators in the city of Vaughan (12)

Fairbnb (national coalition of homeowners, tenants, tourism businesses and

labour organizations)

City of Vaughan staff

Airbnb

The Regional Municipality of York

Vaughan Chamber of Commerce

Building Industry and Land Development Association (BILD)

Greater Toronto Hotel Association

Ontario Restaurant Hotel and Motel Association

Expedia

Greater Toronto Apartment Association

Insurance Bureau of Canada

Travel Industry Council of Ontario (TICO)

Toronto Real Estate Board

Municipal Property Assessment Corporation (MPAC)

Federation of Ontario Bed and Breakfast Accommodation

The Condo Owners' Association

The Ontario Landlords Association

Residential Construction Council of Ontario (RESCON)

Billet hosts in the City of Vaughan (i.e., rentals for foreign students)

The engagement process included three phases:

Phase 1: Iinitial consultation

An online survey was launched on Nov. 1 and ran until Dec. 31, 2018. It was promoted

on all of the City’s corporate channels including Facebook, Twitter, Instagram, the City

Update eNewsletter, Vaughan TV and community centre TV screens, digital signs, the

website homepage and in Council eNews. A public service announcement, which was

published on Nov. 5, 2018, also promoted the online survey and was distributed to

media outlets. The Vaughan Citizen picked up the story and published it online on Nov.

6, 2018 and in print on Nov. 16, 2018. Citizens who called in to Access Vaughan from

Nov. 26 to Dec. 7, 2018 were also asked to answer select survey questions regarding

short-term rentals. An email address, [email protected], was also created

to receive and respond to questions and comments about STRs.

A total of 830 surveys were completed: 425 through the online survey and 405

completed over the phone with an Access Vaughan citizen service representative. A

total of 133 open-ended comments were received via the online survey. A total of 203

email addresses were collected from respondents who indicated interest in receiving

information from the City, as it becomes available, related to short-term rentals in

Vaughan, including future consultation opportunities.

Phase 2: Public and stakeholder meetings

A public consultation meeting was held in each of the five wards in Vaughan in February

and March of this year. The public meetings were attended by a total of 45 residents.

The meeting format included a background presentation on STRs, including information

about the current prevalence of STRs in Vaughan, as well as a question-and-answer

period and a handout for participants to respond to two key questions:

1. What are the concerns surrounding short-term rentals in Vaughan?

2. What benefits and opportunities do short-term rentals represent for our

communities?

The Corporate and Strategic Communications department implemented a

comprehensive communications approach to promote the public meetings. There was

also outreach to the approximately 200 citizens who provided their email addresses

during phase one who expressed their desire to be informed on future consultation

opportunities, as well as industry stakeholders who were also engaged in phase one.

Numerous meetings and discussions were held with various interest groups and STR

companies, such as the Toronto Real Estate Board and Vaughan Chamber of

Commerce and Airbnb, and as well, staff conducted a review of Fairbnb online media,

an advocacy group which has shared concerns with respect to STRs and their impact

on affordable housing and resident safety.

https://www.vaughan.ca/news/Pages/Have-your-say-on-Vaughan%E2%80%99s-short-term-rentals.aspx

https://www.yorkregion.com/news-story/9006759-vaughan-wants-you-to-take-survey-on-city-s-low-short-term-rentals/

mailto:[email protected]

Phase 3: Validation

As part of phase three consultations, staff updated the website with information about

the recommended regulatory framework for STRs, including the proposed technical

amendments to the City’s Zoning By-law, creation of a new by-law for STRs licensing

and a Municipal Accommodation Tax (MAT) STR By-law. The STRs email address,

[email protected], remained open to receive additional comments and

questions about the recommended regulatory framework.

Staff also sent follow up emails to the original industry stakeholder list created as part of

Phase One. Follow up communications with these groups included notifying them of the

City’s recommended regulatory framework and notice that the public report would be

presented at a Finance, Administration and Audit Committee Meeting, and that the

public could attend to provide further comment.

2018 Citizen Satisfaction Survey

To assess citizen satisfaction with existing programs and services provided by the City

of Vaughan and to prioritize issues to improve and focus municipal service delivery, the

City has routinely conducted citizen satisfaction surveys since 2007. Through the most

recent 2018 survey, the information gathered was intended to assist the City in

identifying key trends and issues of importance as we continue to strive for service

excellence.

Administered by research firm Ipsos-Reid, the 2018 survey was conducted among 806

respondents 18 years of age and older living in the city of Vaughan. The margin of error

of the completed interviews was +/- 3.5 per cent, 19 times out of 20. The results of the

survey were weighted based on age, gender and sub-region within Vaughan to match

the demographic profile of residents based on 2016 census data. The survey ran from

June 18 to July 15, 2018. Of note, the survey asked the following question: In your view,

as a resident of the City of Vaughan, what is the most important issue facing your

community, that is the one issue you feel should receive the greatest attention from your

Mayor and Members of Council?

This was an unprompted question, meaning citizens were not given a list of issues to

choose from, rather, they were encouraged to proactively provide their own ideas. Staff

requested that Ipsos-Reid review citizen responses to determine if any specific

references to STRs or Airbnb were made. They found there were no mentions of either,

indicating that STRs is not an important top-of-mind issue compared to other issues.

Based on this fulsome engagement, staff have identified key information and trends in

public sentiment with respect to STRs, summarized below.

Short-term rentals in Vaughan

Staff used complaint information and stakeholder input to gain a better understanding of

the nature and extent of the issues that STRs have created in Vaughan.

mailto:[email protected]

Airbnb in Vaughan

Staff engaged the popular STR company Airbnb, who advised that they hold 80% of the

STR market share in Vaughan, which by their present estimates means that they offer

320 of the current 400 STRs offered in the City. The company provided the following

information:

on February 12, 2019, there were 320 STR hosts in Vaughan, though they

explained that this number fluctuates regularly;

Vaughan STR hosts typically earn $6,700 per year on average;

a typical STR rental is for 4.1 nights at a time;

typical STR hosts rent their home/room for 49 nights annually; and

49% of Vaughan STR hosts typically rent their entire home, while 48% typically

rent a private room within their home, which in a pool of 320 STRs, equates to

157 entire homes rented and 154 homes renting a private room.

Prevalence and distribution of Short-Term Rentals

The City’s Planning department has reviewed the distribution of STRs, finding that they

are found throughout the City, with greater concentrations in some areas which may

vary by season, such as areas surrounding Canada’s Wonderland during the summer

season.

Based on 2016 StatsCan data with respect to numbers of households considered in

tandem with data from Airbnb, we can estimate that approximately 400 of the total

94,217 households in Vaughan are likely hosting STRs at any given time.

What we heard about short-term rentals

Vaughan residents, through a series of consultations across the city’s five wards,

shared their experiences, concerns and suggestions with respect to short-term rentals.

Input from York Regional Police

In reviewing their activity related to STRs, York Regional Police (“YRP”) advised that in

2018, there were several criminal and non-criminal complaints investigated, such as

assaults, sexual assaults, disputes, identity fraud and property damage. YRP suggested

that STR applications should require a greater breadth of information, including

insurance and key contact information, and that processes for lodging complaints

related to STRs should be clear and accessible to the public.

Support for city regulation

As mentioned above, in the telephone and online surveys, staff heard from 830

respondents; more than three quarters indicated that they were Vaughan home-owners,

but as well, respondents included other organizations, such as condominium board

members, a short-term rental platform company, a tourism organization and various

ratepayers’ association members. Two key results were that:

473 of respondents advised that STRs are not an issue in Vaughan; and

581 of respondents believed that the City should regulate STRs.

As such, while more than half of respondents did not believe that STRs were an issue in

Vaughan, the great majority of respondents believed that the City should have a

regulatory framework in place to govern them.

Concerns about Short-Term Rentals

Staff heard the following concerns from stakeholders and complaints.

Homes being used as party houses: A number of residents reported living in

close proximity to STR houses being used to host parties on the weekends. They

described these parties as often having loud music until late hours of the night,

many parked vehicles which frequently obstructed the flow of traffic and, in some

cases, houses had hired security guards manning the door, similar to a night

club. In a few recent incidents in Vaughan, there have been incidents of criminal

matters occurring at these parties, prompting the attention of YRP.

Poor upkeep of properties: Some residents complained of STR properties

being poorly maintained, with renters sometimes damaging property and leaving

behind excessive amounts of trash, all contributing to a general concern over

how these nuisances might impact property values.

Fire and access safety: Some residents expressed concern that STRs in

homes may not have the proper life-safety measures, such as smoke and carbon

monoxide alarms, and that the owners may not be providing the proper

emergency information to their renters, potentially creating a serious hazard.

Condominium residents: Some condominium residents expressed concern

that having STR renters leads to overuse and excessive wear-and-tear of

common/shared areas, ultimately resulting in higher condo fees, and concern

about their homes feeling like hotels, with a changing influx of different STR

renters having access to their buildings.

Hotels, motels, other accommodation venues and the Municipal

Accommodation Tax: These venues expressed concern over unfair competition

from STRs, who are not subject to the same taxes and often provide

accommodation at lower costs. As of April 1, 2019, as per By-law 029-2019,

guests at Vaughan hotels, motels, campgrounds and bed-and-breakfasts have

been required to pay the Municipal Accommodation Tax (MAT), a 4% charge for

paid overnight accommodations.

Impact on affordable housing: One concern that surfaced in almost every

municipality is that homeowners/occupants may choose to offer available rooms

or suites as STRs instead of as long-term affordable housing, with the underlying

motivation being able to earn more money as an STR provider, while avoiding

stricter landlord-tenant regulations associated with long-term rentals. Many

municipalities have attempted to protect the long-term affordable housing supply

by limiting the number of nights that an STR can be rented to be between 28 and

30 nights, with an additional limit on the total number of days that an STR can be

rented in a given year.

Positives of Short-Term Rentals

Staff also heard from stakeholders about the positive impacts of STRs:

Additional supplementary income: Some stakeholders expressed interest in

becoming STR operators as a way to supplement their income and have greater

housing stability.

Affordable travel options for tourists, families and those caring for loved

ones: Some residents expressed that they enjoyed using STRs to travel and

found them to be an enjoyable and more affordable option for accommodation,

especially for large families. STRs also were seen as more economical and

convenient alternatives for those with relatives who may be staying in the City for

various other reasons, such as required medical care.

Support to Vaughan business community: Some suggested that STRs

contributed to ancillary industries, economic stability and greater business

success for restaurants and other industries that benefit from, and cater to,

visitors.

Increased accessibility to housing options through technology: Some

stakeholders indicated that STR platforms made it easier to find accommodation

within an area, providing an opportunity to lodge in a desired area while looking

for permanent accommodations within that same area and to create greater

rental-housing competition within an area, putting a downward pressure on rental

housing prices generally in that area.

Current regulatory framework and oversight

In the event of an issue, BCLPS, VFRS and Building Standards will collaborate to

appropriately respond to circumstances relating to use and occupancy. The City will

also continue to engage YRP as needed, for more serious matters, such as criminal

offences in any circumstance.

The City currently has a range of regulations with which to address the concerns

associated with any properties, including STRs, such as the Debris, Noise, Parking,

Property Standards, and Waste by-laws, as well as the Ontario Building and Fire

Codes. Staff have a range of powers under these regulations, such as issuing monetary

penalties for infractions, undertaking and recovering costs of remedial work where

needed and where appropriate, and/or pursuing an order to close the premises where a

residential home is being misused for other purposes.

Despite the City’s regulatory toolkit, Zoning By-law and Licensing By-law do not speak

specifically to STRs; this limits the ability of staff to address STRs in a more

comprehensive way. Staff note that the following Ontario municipalities have developed

or are in the process developing STR-specific regulations:

Blue Mountains

Kingston

London

Markham

Mississauga

Niagara-on-the-Lake

Oakville

Ottawa

Toronto

Waterloo

Among these municipalities, staff noted several commonly proposed/implemented

approaches to increasing their regulatory abilities, including:

requiring registration or licensing of STR “brokers”, such as Airbnb, and STR

“operators”, i.e., persons renting their homes or a portion of their homes;

creating STR-specific regulations, including the requirement for brokers and

operators to share information;

creating the ability for STR operators to be penalized and even banned from

operating when non-compliant with regulations, and requiring STR brokers from

not advertising them;

placing limits on the number of nights a home can be rented as an STR, in order

to minimize the reduction of homes offered for long-term affordable housing;

establishing application, renewal, and inspection fees to recover costs associated

with STR regulation from those in the industry rather than solely from the tax

base;

requiring STRs to be occupied by the primary resident; and

no changes to the cities’ Official Plans are proposed on the basis that STRs are

considered to be accessory to principal residential use.

Table 1 - Jurisdictional scan of Ontario Short-Term Rental regulations

City Status on regulation of Short-Term Rentals

Short-Term Rental fees (if applicable)

Blue Mountains

Regulation is in place, with restrictions on which residential zones STRs are allowed to operate

Application fee for operators: $2,500.00 for houses and $1,500.00 for condo units

Renewal fee for operators: $1,000.00 for houses and $500.00 for condo units

Late renewal fee: $500.00

Fire safety inspection: $75.00

STA Licensing Committee Appeal fee: $500.00

Council STA Appeal Fee: $500.00

STA re-inspection fee: $100.00

Replacement STA licence placard: $50.00

Brampton No regulations are in place

NA

Caledon No regulations are in place

NA

Guelph No regulations are in place

NA

Kingston Licensing intended to be introduced in 2019

Fees for operators: $ 175 for 5 years, proposed

London

STR study underway, with consultations scheduled for Q3 2019

NA

Markham

Regulations are pending, however in the interim, rezoning is required to operate STRs

Fees for brokers: $5000 one-time application fee per company + $1/night booked

Fees for operators: $50 annually

Mississauga

Regulations are pending, with STRs not allowed in secondary suites or basement apartments

NA

City Status on regulation of Short-Term Rentals

Short-Term Rental fees (if applicable)

Niagara-on-the Lake

Regulations are in place

Fee for brokers: NA

Fees for operators: $108/license guest room per year

STR Appeal Fee: $250 (non-refundable)

Oakville Regulation pending Fees for brokers: $ 44,500 annually

Fees for operators: $ 237 annually

Ottawa Study underway

NA

Richmond Hill No regulation in place

NA

Toronto

Regulations are pending a Local Planning Appeal Tribunal (LPAT) appeal in August 2019

Fees for brokers: $5000 annually and $1 per night rented

Fees for operators: $50 annually

Waterloo Regulations are pending

No specific STR licensing, however there are rental licences ranging from $500 to $1200

Staff have considered these and other regulations in developing the recommendations

outlined in the Analysis and Options section.


Municipal Accommodation Tax, Item 3, Report No. 1, Finance, Administration and Audit

Committee, January 29, 2019.


Staff recommendations and reasoning are listed below.

http://www.vaughan.ca/business/General%20Documents/MAT%20Council%20Extracts%202019.pdf

Table 2 – Current state, proposed regulations and reasoning

No Current state Proposed regulation or action Reasoning

1 Short-Term Rentals

are not defined in

any City of

Vaughan by-law

and are therefore

not explicitly

regulated.

Define Short-Term Rentals as, “All or part of a dwelling unit used to provide sleeping accommodations for any rental period that is 29 consecutive nights or less in exchange for payment but does not include Bed-and-Breakfasts.”

By defining STRs, the City can clearly articulate what constitutes a legal STR and, in this way, apply specific provisions and requirements.

2 Letting, lodging, boarding, and other arrangements of accommodation are not licensed by the City.

Create licensing categories for STR

Brokers (such as Airbnb) and STR

Operators (those who rent their homes) in

a stand-alone by-law, requiring initial

licensing and annual renewal, requiring

the following annual fees:

STR Brokers to be licensed and renewed

annually at:

$10,000 for those with more than 100

listings;

$5,000 for those with 51 to 100

listings;

$1,000 for those with 11 to 50 listings;

and

$500 for those with 10 or fewer

listings.

STR Operators to be licensed annually at

$300 per property.

Licensing provides the City with leverage when it comes to inspection authority and enforcement powers, as well as the revenue to contribute to the costs of administration, oversight and enforcement, thereby off-setting pressure on the City’s tax base.

3 The City does not currently collect information about STR Operators.

As a condition of licensing, require STR

Brokers and Operators to share and

update information with respect to:

their contact information, including

emergency contacts where someone

can be reached 24 hours a day during

rental periods;

a description of their property, which

parts will be used for rental and

access/exit information; and

To ensure the City

has appropriate

contacts and

information to

respond to any

complaints related to

STRs, as well as to

verify that the STR is

being operated in

accordance with

regulation (e.g.

principal residence).


government-issued identification that

demonstrates that the address is the

STR Operator's principal residence.

4 There are no specific by-law provisions that related to STR operation and advertising.

Create provisions in which an STR licence

may be refused, suspended, subject to

conditions and/or revoked, including but

not limited to when:

1. The applicant/licensee has not

completed the application, including

submission of required documents of

fee payment.

2. The applicant/licensee has failed to

pay fees, fines or any outstanding

debt (e.g. MAT) associated with this or

other City by-laws.

3. There is reason to believe the

information provided is false or ceases

to be accurate.

4. Where an adverse report has been

received from any of the officials,

departments, or other public

authorities.

5. The applicant/licensee are not acting

in accordance with integrity, honesty

or any laws or there is reasonable

grounds to believe they are not doing

so.

6. There are reasonable grounds to

believe that the conduct of the

applicant/licensee and/or other

circumstances has infringed or would

infringe on the rights of other

members of the public and/or would

endanger their health, safety, or would

infringe on the rights of members of

the public.

Where the Chief Licensing Officer deems it necessary, the City would be able to prohibit an STR broker or host from operating, impose conditions, suspend, or revoke any licence, as well as to ban them from re-applying to operate for a period of up to 12 months, subject to appeal.


7. An applicant/ licensee was refused/

revoked/ suspended within the last 12

months.

8. There is any other matter that the

Chief Licensing Officer is authorized

by law to consider.

In addition, create the provision that any

refusal, suspension, revocation or

condition would be subject to an appeal

process.

5 There are currently

no by-laws which

advise that STRs

must operate in line

with existing

regulatory

requirements.

Advise that STRs must operate in

accordance with all applicable law and

regulations, including but not limited to the

Building and Fire Code.

To create greater

awareness amongst

operators and in this

way to achieve

higher levels of

compliance

6 There is no unique identifier for STR Operators.

Require STR Brokers to list STR Operator licence numbers in advertisements and require STR Brokers to stop advertising any STR for which the licence has been suspended or revoked by the City.

This will encourage a

system of

transparency,

enabling

complainants to

more easily identify

STRs and report any

issues to the City for

follow-up.

7 There are no current provisions restricting in what areas STRs can operate.

Allow STR Operators to offer accommodations in residential dwelling types only, as determined by the related proposed zoning by-law provisions.

To identify where

STRs are permitted

and to prohibit non-

residential buildings

from being used as

STRs, while

continuing to allow

other types of

purpose-built

accommodation

buildings, such as

hotels and motels, to

continue to operate.


8 There is limited authority for City staff to enter dwelling units for the purposes of inspection, requiring that they must have the occupant’s permission or a warrant.

Under licensing, STR Operators can be

compelled to provide access to their

properties for purposes of inspection, as

well as take other safety measures, such

as post life-safety plans which outline

access and egress, and among other

regulations, establish criteria and penalty

for obstructing the appropriate City

officials for carrying out their lawful

authorities.

To ensure compliance with relevant life-safety and all other regulatory standards, including powers of the City and related penalty system.

9 Many municipalities

limit the length of

time for which a

STR can be rented,

such as ranging

from 28 to 30 days

STR Operators to be required to list accommodations for periods of 29 consecutive nights or less per booking and not exceeding 180 days for all bookings within any calendar year.

This provision is

aimed at limiting the

accommodation

terms in order to

mitigate the adverse

impact on potential

affordable long-term

rental housing. This

requirement is also

aligned with MAT

regulations.

The 180-day cap is

intended to limit the

economic benefit of

short-term rentals

vis-à-vis long-term

housing, thus

promoting the later.

10 There are no regulations with respect to which homes and units can provide STRs

Allow STR Operators to offer

accommodation in any home which is the

owner’s principal residence or the

principal residence of a tenant who has

the owner’s permission to operate an

STR, also requiring that in the case or a

condominium, the additional permission of

the Condominium Board is required.

These regulations will be achieved

through the proposed licensing

framework.

This provision is

aimed at prohibiting

strictly commercial

and speculative

interests from

operating STRs at

the expense of long-

term housing.

11 The Zoning By-law

permits Bed-and-

Breakfast

establishments in

This should stay the same, as a separate category of accommodation that continues to require site-specific Council approval.

No issues have been reported to the City about these businesses.


the C11 Mainstreet

Commercial zone

12 There are no limits on the number of simultaneous bookings that can be hosted by an STR

Allow STR Operators to allow one booking for one property at any time, whether it be the whole home or a single room that is being rented.

This provision is

intended to limit the

number of different

parties occupying a

home at one time, in

the hopes of

reducing nuisances,

parking issues and

other concerns.

13 There is no requirement for an STR Broker to disclose information about STR hosts.

Require STR Brokers to disclose

information about STR hosts and their

accommodations to the City as needed for

investigation and planning purposes, and

to retain this information for at least three

years.

Leverage the information gathered by STR Brokers to enhance the City’s ability to investigate and plan.

14 MAT of 4 % will apply to City of Vaughan hotels, motels, campgrounds and bed and breakfasts as of April 1, 2019.

Require that STRs be subject to MAT, which must be collected and remitted to the City by STR brokers.

This will ensure MAT is applied fairly and consistently among different types of accommodations throughout Vaughan, and remitted to the City in an efficient manner.

15 Staff have

observed that some

STR brokers are

based in other

countries, and as

such, operate with

different regulations

than those which

would apply here.

To prohibit any STR Brokers from imposing mandatory arbitration clauses for STR Operators or users, or regulations outside of those in line with Canadian, Ontario or municipal regulation.

The intent of this provision is to ensure that all parties involved in STRs are subject to the correct regulations, and not subject to restrictive clauses that would prohibit their ability to exercise their local rights.

16 There are currently no penalties specific to STR operation.

Establish penalties for any person or

director or officer of a corporation who

commits or assents to a contravention of

the by-law, with fines not to exceed

$100,000 or a special fine, in an amount

Ensure that the City has the authority to impose penalties for STRs operating in


the court deems appropriate to eliminate

or reduce the possible economic

advantage of the contravention, and a fine

of up to $10,000 per day for each day in

which an offence continues.

In addition, ensure that obstruction,

hindrance or interference of an

investigation be a chargeable offence.

contravention of regulations.

17 The City of Vaughan Official Plan (OP) does not address STRs.

That no change to the OP is proposed at

this time, on the basis that STRs in

Vaughan are considered to be accessory

to principal residential use.

With that said, staff intend to monitor the impact of STRs over time.

This will enable land use to continue as outlined in the OP, while staff evaluate its impact and if needed, undertake the OPA process.

Financial Impact

Licensing revenue and staffing

Pursuant to the Municipal Act of Ontario, and the subsequent authority to impose a

licensing framework, revenues generated through licensing must be applied to the

administration and enforcement of the licensing which generates the revenue. City staff

are exploring the need for additional resources and technology to administer and

enforce the new regulations and will proceed through the appropriate process during the

2020 Budget submission cycle.

In the interim, City of Vaughan staff intend to draw on existing staff resources in BCLPS,

Building Standards, and VFRS to administer, monitor and enforce the proposed

regulations. Extrapolating data on existing use, the following projected licensing

revenue is anticipated annually, which is anticipated to offset the immediately resulting

costs and any future anticipated costs:

Table 3 – Projected annual licensing revenues

Licensee Estimated number of licensees

Suggested licensing fee

Expected annual revenue

STR broker - more than 100 properties

2 $ 10,000 $ 20,000

STR broker - 51 to 100 properties

3 $ 5,000 $ 15,000

STR broker - 11 to 50 properties

6 $ 1,000 $ 6,000

STR broker - up to 10 properties

12 $ 500 $ 6,000

STR operators 400 $ 300 $ 120,000

TOTAL PROJECTED REVENUE $ 167,000

Staff anticipate that STR regulation will necessitate additional administrative and

enforcement resources, anticipating the following additional requirements:

BCLPS anticipates need for an additional Full-Time Equivalent (FTE)

enforcement position and one additional part-time administrative staff, which

would be offset by the projected revenue.

VFRS anticipates an increased requirement of 0.25 FTE for costs associated

with the inspection of complaints and enforcement of infractions under the

Ontario Fire Code.

Building Standards and Fire and Rescue Services will continue to monitor the

impact on their resources and assess their needs accordingly.

Municipal Accommodation Tax

In 2018, ECD commissioned a study, Market Assessment of Municipal Accommodation

Tax, conducted by CBRE Limited Valuation and Advisory Services; their findings

suggest that the STR market will continue to grow, and that a 4% MAT would likely

generate at least $120,000 in tax revenue annually.


The proposed recommendations would bring Vaughan in line with the regulatory

approaches which have been and/or are being undertaken by other major Ontario

municipalities, providing greater consistency across Ontario cities, including for

residents, visitors, the business community and STR Operators and Brokers.

Conclusion

The proposed establishment of a regulatory framework aligns directly with the City’s By-

law Strategy and directly supports Term of Council Service Excellence Strategic Plan

(Area 4): ACTIVE, SAFE AND DIVERSE COMMUNITIES and (Area 5): ECONOMIC

PROSPERITY, INVESTMENT AND SOCIAL CAPITAL to ensure the health and safety

of our residents, maintain a high quality of life and foster economic sustainability across

our City.

Proposed amendments include recognition of short-term rentals as a permitted use in

areas where residential uses are permitted, the introduction of a licensing and

regulatory regime, and the requirement for all short-term rentals to be subject to MAT.

The proposed regulations will ensure that the City of Vaughan has the ability to mitigate

the potential impacts of Short-Term Rentals, support the identified benefits and ensure

the appropriate measures are in place to address current and potential future

concerns.

Given the timelines required under the Ontario Planning Act for amendments to zoning

regulation, staff estimate that the proposed by-laws and amendments will be enacted in

fall of 2019, with regulations implemented by January 2020.

For more information, please contact:

Gus Michaels, Director and Chief Licensing Officer, ext. 8735

Deryn Rizzi, Vaughan Fire Chief, ext. 6301

Attachments

1. Proposed recommendations

Prepared by

Carol Ramchuram, Regulatory Policy Analyst, ext. 8783

Rudi Czekalla-Martinez, Manager, Policy and Business Planning, ext. 8782

Attachment 1

Proposed recommendations

1. To create a new by-law, (Short-Term Rentals By-law), in line with the following:

a. Define Short-Term Rentals as, “All or part of a dwelling unit used to

provide sleeping accommodations for any rental period that is 29

consecutive nights or less in exchange for payment but does not include

Bed-and-Breakfasts.”

b. Require a licence for STR Brokers (such as Airbnb) and STR Operators

(those who rent their homes) in a stand-alone by-law, requiring initial

licensing and annual renewal, subject to the following annual fees:

i. STR Brokers:

a. $10,000 for those with more than 100 listings;

b. $5,000 for those with 51 to 100 listings;

c. $1,000 for those with 11 to 50 listings; and

d. $500 for those with 10 or fewer listings.

ii. STR operators: $300.

c. Limit the number of STR units to one per property (i.e., registered lot) and

only on properties within a zone that permits residential uses.

d. As a condition of licensing, require STR Brokers and Operators to share

and update information with respect to:

i. Operator contact information, including emergency contacts where

someone can be reached 24 hours a day during rental periods;

ii. a description of the Operator’s property, which parts will be used for

rental and access/exit information; and

iii. government-issued identification that demonstrates that the

address is the STR Operator's principal residence.

e. Advise that STR Operators must operate in accordance with applicable

regulations, such as, but not limited to, municipal by-laws, the Ontario

Building Code and Ontario Fire Code.

f. Create the authority for the Director and Chief Licensing Officer, BCLPS,

to refuse to issue or renew a license, to cancel, revoke or suspend a

license, or to impose terms and conditions on a licence when:

i. The applicant/licensee hasn’t completed the application, including

submission of required documents of fee payment.

Attachment 1

ii. The applicant/licensee has failed to pay fees or fines associated

with this or other City by-laws.

iii. There is reason to believe the information provided is false or

ceases to be accurate.

iv. Where an adverse report has been received from any of the

officials, departments, or other public authorities.

v. Reason to believe the applicant/licensee has not complied with any

other applicable law.

vi. The applicant/licensee is not acting in accordance with integrity,

honesty or any laws or there is reasonable grounds to believe they

are not doing so.

vii. There are reasonable grounds to believe that the conduct of the

applicant/licensee and/or other circumstances would/has infringe

on the rights of other members of the public and/or would endanger

their health, safety, or would infringe on the rights of members of

the public.

viii. An applicant’s application/ licensee’s licence was refused/ revoked/

suspended within the last 12 months.

ix. There is any other matter that the Director and Chief Licensing

Officer is authorized by law to consider.

g. Require STR Brokers to list STR Operator licence numbers in

advertisements and require STR Brokers to stop advertising any STR for

which the licence has been suspended or revoked by the City.

h. Under licensing, STR Operators can be compelled to provide access to

their properties for purposes of inspection.

i. STR Operators be required to list accommodations for periods that do not

exceed 29 consecutive nights per booking, and that all bookings for that

STR not exceed 180 days within any calendar year.

j. Allow STR Operators to offer accommodation in any home which is their

“principal residence”; in the instance where the STR Operator does not

own the property, the permission of the owner is required, and in the case

of a condominium, additional permission of the Condominium Board is

required.

k. Require STR Brokers to disclose information about STR hosts and their

accommodations to the City as needed for investigation and planning

purposes, and to retain this information for at least three years.

Attachment 1

l. STRs are subject to the MAT, as per the Municipal Accommodation Tax

By-law(s), or its successor by-law(s).

m. To prohibit any STR brokers from imposing mandatory arbitration clauses

for STR Operators or users, or regulations outside of those in line with

Canadian, Ontario or municipal regulation.

n. Create a provision that no person shall hinder, interfere with or obstruct a

Municipal Law Enforcement Officer from performing any of his or her

duties, as provided for in the by-law.

o. Establish penalties for any person or director or officer of a corporation

who commits or assents to a contravention of the by-law, in a fine not

exceeding $100,000 or a special fine, in an amount the court deems

appropriate to eliminate or reduce the possible economic advantage of the

contravention, and a fine of up to $10,000 per day for each day in which

an offence continues.

p. Any other consequential requirements as prescribed by the new by-law.

2. To amend the Zoning By-law 1-88, as amended, to:

a. Define Short-Term Rentals as, “All or part of a dwelling unit used to


consecutive nights or less in exchange for payment, but does not include

Bed-and-Breakfasts, as defined in the Short-Term Rentals By-law or its

successor by-law”.

b. Amend the definition of “Bed and Breakfast Establishment” to mean “an

establishment within part of a single family detached dwelling that

provides sleeping accommodation for guests, and may include meals,

services, facilities and amenities for the exclusive use of guests, but

excludes a hotel, motel, or Short-Term Rental”;

c. Allow Short-Term Rentals in areas where residential use is permitted; and

d. Limit the number of the Short-Term Rentals to one rental booking per

dwelling unit at any given time.

e. Any other consequential requirements as prescribed by the amending by-

law.

3. To create a Municipal Accommodation Tax STR By-law that:

a. Defines Short-Term Rentals as, “All or part of a dwelling unit used to


Attachment 1

consecutive nights or less in exchange for payment, but does not include

Bed-and-Breakfasts, as defined in the Short-Term Rentals By-law or its

successor by-law”.

b. Requires that Short-Term Rental accommodations be subject to MAT.

c. Any other consequential requirements as prescribed by the new by-law.



TITLE: THE LONG-TERM WATER FINANCIAL PLAN, 2020-2031 AS

PART OF THE MUNICIPAL DRINKING WATER LICENCE

RENEWAL

FROM: Zoran Postic, Interim Deputy City Manager, Public Works

Michael Coroneos, Chief Financial Officer and City Treasurer

ACTION: DECISION

Purpose Adoption of the City’s Long-term Water Financial Plan, 2020-2031, that provides a

financially viable and sustainable water distribution system as required by the Safe

Drinking Water Act, 2002, Ontario Regulation 453/07 and as part of the City’s Municipal

Drinking Water Licence Renewal for 2020.

Recommendations 1. That the attached Long-term Water Financial Plan, 2020-2031, which

demonstrates a viable and sustainable financial plan for the City’s water

distribution system, be approved; and

Report Highlights The City’s Drinking Water Licence is being renewed in 2019 and Council

approval of a twelve-year financial plan is required.

The long-term water financial plan demonstrates the City’s financial

sustainability of the water distribution system to ensure the continuous

delivery of safe drinking water.

2. That a copy of the Council Resolution of the Long-term Water Financial Plan,

2020-2031 be submitted to the Ministry of the Environment, Conservation and

Parks and that a copy of the resolution and plan be forwarded to the Ministry of

Municipal Affairs and Housing.

Background

The Safe Drinking Water Act (SDWA), 2002, requires that the owner of a municipal

drinking water system must apply for renewal of their Municipal Drinking Water Licence

(MDWL) every five years. The City’s current MDWL will expire in 2019 and, as part of

the renewal requirements, a minimum of a six-year financial plan must be created and

approved by Council. The City has decided to extend the financial planning horizon

over a longer term to ensure full cost recovery for the water distribution system, and will

be submitting a twelve-year plan from 2020 through to 2031. This longer-term plan will

be reviewed on a regular basis to ensure it continues to align with the City’s water

program.


https://www.vaughan.ca/council/minutes_agendas/AgendaItems/Finance1202_13_3.pdf


The City currently holds a Drinking Water Works Permit along with a Municipal Drinking

Water Licence, both of which are required to operate a drinking water system. The

current Municipal Drinking Water Licence expires on June 15, 2019 and therefore the

City is required to provide the Province with a Council Resolution indicating approval of

a financial plan before that time.

The financial plan must include a:

Statement of Operations

Statement of Financial Position

Statement of Net Financial Assets

Statement of Cash Flow

The financial plan must be adopted by the Council of the municipality and the resolution

must also indicate that the drinking water system is financially viable.

Financial Impact

There is no financial impact as a result of this report, however, the Long-term Water

Financial Plan, 2020-2031 will be reviewed during the preparation of the 2020 – 2031

water operating and capital budgets.


No implications

Conclusion

The financial sustainability of the City of Vaughan’s drinking water system has been

evaluated in the Long-term Water Financial Plan, 2020-2031. Financial projections

have been made based on a series of assumptions, the most important of which

includes system infrastructure growth, account growth, future water rates and future

water purchase costs. Statements built on these assumptions conclude that the City of

Vaughan has a financially sustainable drinking water system.

The Long-term Water Financial Plan, 2020-2031 is a living document and will be

reviewed annually to ensure that the drinking water system continues to be financially

sustainable and that any necessary adjustments are made as needed to achieve this

objective.

For more information, please contact: Jack Graziosi, Interim Director of Environmental

Services or Dean Ferraro, Director of Financial Services/Deputy Treasurer.

Attachments

1. Long-term Water Financial Plan, 2020-2031

Prepared by

Sean Skinkle, Finance Manager, Water/Wastewater/Stormwater, extension 8486

Carol Warner, Supervisor of Compliance and Business Services, Environmental

Services, extension 6197

ATTACHMENT 1

City of Vaughan Long-term Water Financial Plan, 2020 – 2031 Page 1 of 19

Table of Contents

Executive Summary

2

Background

3

Methodology

3

Debt Expenses

5

Current Revenue

6

Current Expenses

7

Capital Expenditures

8

Amortization Expenses

9

Accumulated Amortization

10

Annual Surplus or Deficit

10

Conclusions

10

Process for Approval and Submission

10

APPENDIX A – Ontario Regulation 453/07

12

APPENDIX B – Statement of Financial Position

15

APPENDIX C – Statement of Operations

16

APPENDIX D – Statement of Cash Flow

17

APPENDIX E – Statement of Change in Net Financial Assets 18


Executive Summary

As part of Justice O'Connor's Recommendation Report from the Walkerton Inquiry, the

Province enacted the Safe Drinking Water Act (SDWA), 2002. In 2007, the Ministry of

the Environment, Conservation and Parks (MOECP) released Ontario Regulation 453/07

(Financial Plans) under the SDWA. This regulation requires that a financial plan be

prepared as part of the Municipal Drinking Water Licencing Program, for both new

licences and licence renewals. Further, the Long-term Water Financial Plan utilizes

guidelines of the Public Sector Accounting Board’s (PSAB) accounting standards 3150

for tangible capital asset accounting. The Long-term Water Financial Plan is intended

to ensure that the City of Vaughan, as the drinking water system owner, plans for the

long-term financial sustainability of the drinking water system and to guarantee safe

drinking water into the future.

The Long-term Water Financial Plan must include a statement that the financial impacts

of the drinking water system have been considered, apply for a minimum of six (6) years

and outline details of the proposed or projected revenues and expenses. The financial

plan must also identify all assets and liabilities. The City of Vaughan has prepared a

12-year financial plan to encompass two Licencing periods to forecast the financial

sustainability of the water system well in to the future. This financial plan will

supplement the annual water program budgeting process and will be updated on a

regular basis to reflect substantive changes.

Information on projected statements of financial position can be found in appendices ‘B’,

‘C’, ‘D’ and ‘E’.


Background

The City of Vaughan has been preparing and submitting water financial plans since

2010 in support of its Municipal Drinking Water Licence (MDWL). The first financial

plan, covering the period 2010 through 2015, was approved by Council on June 15,

2010. A subsequent financial plan, covering the period 2014 through 2019, was

approved by Council on December 10, 2013. This new Long-term Water Financial Plan

(the Financial Plan) Number 011-301 will span the period from 2020 through 2031.

One of the conditions of receiving the MDWL requires that a financial plan that satisfies

the conditions of Ontario Regulation 453/07 be approved by Council. This financial plan

has been created to comply with the requirements of O. Reg. 453/07 and covers the

City of Vaughan’s public portion of the water system which includes all distribution

systems, pipes, meters, valves, and hydrants. The financial statements included in this

report project 12 years into the future.

Vaughan residents purchase their drinking water from the Regional Municipality of York

(York), who in turn import their water from the City of Toronto and the Region of Peel.

All treatment operations to ensure safe, potable water are performed by Toronto and

Peel prior to transmission to York’s water infrastructure, however both Vaughan and

York further sample and test the water on a regular basis. This financial plan only

considers Vaughan’s water system.

Methodology

Ontario Regulation 453/07, included as appendix ‘A’, requires that MDWL holders

provide detailed information indicating the municipality is financially sustainable now

and into the future. Determination of sustainability focuses on the following projections,

including:


• Projected financial position including assets, liabilities, net debt and

tangible capital assets;

• Projected financial operations including revenue and expenses; and

• Projected cash receipts and cash payments.

In order to meet the requirements of O. Reg. 453/07, the City of Vaughan has followed

a formal five-step methodology in the development of the financial plan. The five steps

include:

1. Establish the assumptions regarding growth, water rates and rate of

inflation;

2. Determine current and future revenues under the assumptions;

3. Determine current and future expenditures under the assumptions;

4. Determine current and future capital expenditures under the assumptions;

and

5. Assess whether the drinking water system is financially sustainable under

these assumptions.

The following table includes the high-level assumptions that were used in the

development of the financial plan. These factors were derived from multiple sources

including the City’s Capital Asset Management Plan, the City’s Planning Department,

Alectra Energy Services (City’s meter reading and billing agent), York Region and The

Conference Board of Canada.


Item Assumption(s) Details System infrastructure 2.0% - 3.0% Year-over-year inflation increase to

the water system infrastructure Account growth 1.01% R

1.13% ICI Year-over-year growth to the account base for residential(R) and Industrial/Commercial/Institutional (ICI) accounts based on population growth projections

Current consumption per unit

267 m3 Average amount of water used by account, trending down by 1% per year after 2022

City Water rates 9.9% - 5.0% 9.9% in 2020 and 5.0% for 2021 through 2031

York Region wholesale water rates

4.8% - 4.6% Water purchase rates charged by York Region, 4.8% in 2020 and 4.6% for 2021 through 2031

Operating Expenses 4% Average of 4% annual increase in maintenance and installation costs, and general administration costs that includes both volume and price increase

Debt Expenses

Currently the City of Vaughan has no debt associated with the water program. During

the 2018 budget process, City Council approved a Smart Meter and Advanced Metering

Infrastructure (AMI) project in the amount of $38,500,000, 50% (i.e. $19,250,000) of

which is charged against the wastewater program with the other 50% being charged to

the water program. The project is expected to be completed in 2023, following which

the total amount of the project will be debentured. Principal repayment and interest

charges will extend through 2042 until the full amount of the debt is repaid. The City is

not expected to incur any other debt through 2031.


Current Revenues

Revenues are primarily driven by consumption charges, that is metered consumption

multiplied by the water rate. The City also charges for water related services, including,

for example, water turn-offs and water line thawing. Changes to revenue is based on

two things, one being population growth and the other being the per-unit use of water.

Vaughan is assumed to grow at a rate of 1.01% for Residential and 1.13% for

Industrial/Commercial/Institutional accounts, adding 9,774 and 429 accounts

respectively by 2031. In contrast to account growth, the City has seen a steady

decrease in per unit consumption driven by ongoing conservation initiatives and lower

demand caused by increases in the cost of water. These assumptions are critical in

modeling revenue projections. Deviations in projected population growth or per-unit

demand can lead to large changes in projected revenue. The Financial Plan will be

reviewed on a regular basis and updated as required when significant revenue changes

occur.

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Projected Outstanding Debt ($M)


In respect of water charges, it has been assumed that York Region’s wholesale

purchase costs will increase at 4.6% per year and the City’s water rate will increase at

9.9% for 2020 ($2.2777/m3), 3.0% for 2021 and 2022 and 5.0% per year from 2023

through 2031 ($3.7486/m3). Revenue projections have assumed that the current

customer base will increase over the 12-year period of the financial plan. The growth in

customer base has been projected based on planning forecasts.

Current Expenses

As a starting point for the financial plan, current year operating expenditures were taken

from the City’s approved 2019 Budget and 2020-2022 Financial Plan. These expenses

are assumed to increase linearly at an average of 4.0% from 2020 through 2031, due to

both volume and price increases. There are two main expense types, one being the

purchase of bulk water from York Region and the other City specific expenses. The

Financial Plan will be reviewed on a regular basis and updated as required when

significant expense changes occur.

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Projected City Water Rate ($)


York Region water purchases represent the single largest expense, currently

representing approximately 70 cents of every dollar collected. York Region has posted

their wholesale water rates for 2020 and 2021 at 4.8% and 4.6% respectively. Based

on discussions with York Region, it is assumed the wholesale water rate will remain at

4.6% through 2031.

City operating expenses are the sum of the operating, interest and amortization

expenses incurred to run the City’s day-to-day potable water program. Operating

expenses include maintenance and installation costs, general administration (e.g. office

supplies, wages, benefits), amortization and debt repayment costs and contributions to

the water reserve.

Capital Expenditures

The water program reviews and updates short term (one (1) year) and longer-term (four

(4) year) capital expenditures in the annual budget development process. Capital

planning for the water program considers both existing and future requirements

$0

$10

$20

$30

$40

$50

$60

$70

$80

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Projected City Operating Expenses ($M)

Maintenance and Installation General Administration Debenture Interest

Amortization Reserve Contribution


associated with the distribution system (e.g. linear infrastructure, valves, meters) and

supporting systems (e.g. control systems, modelling tools). Planning for the repair and

replacement of the distribution system uses state of good repair analysis which

considers projected asset useful life and history of asset performance. Supporting

system capital planning focuses on the tools and processes to manage an increasingly

complex water system, including hydraulic modelling, leak detection and non-revenue

water mitigation.

Capital plan development also considers the funding sources and the sustainability of

the water reserve. The water reserve and development charges are the primary funding

sources for capital projects. The City also actively pursues grant opportunities which

help reduce draws on the water reserve.

Capital expenditure planning is gradually becoming better informed based on outputs

from the City’s Asset Management Plan. The Asset Management Plan, which includes

water infrastructure assets, is reviewed and updated annually to capture additions, write

downs and disposals of those assets. Asset management allows for longer range

modelling to assess complicated long-term challenges and to help mitigate against

sudden and significant rate increases and/or the need for major debt financing.

Amortization Expenses

Amortization is a non-cash expense, which represents the usage of tangible capital

assets (TCAs). The annual expense is based on the asset’s historic cost and

apportioned over the useful life of the asset using the amortization method adopted

for the purposes of PSAB 3150. The City of Vaughan uses the straight-line method

to calculate annual amortization expense.


Accumulated Amortization

Using annual depreciation as a basis for reserve funding is a best practice according

to the Government of Canada’s National Guide to Sustainable Municipal Infrastructure.

Annual Surplus or Deficit

The City of Vaughan uses a zero-based budget approach for the water program,

transferring prior year surpluses into the water reserve at year end. In the event of a

deficit the amount of the deficit will be financed from the water reserve.

Conclusions

The financial sustainability of the City of Vaughan’s drinking water system has been

evaluated in this Financial Plan. As outlined above, the financial projections have been

made based on a series of assumptions, the most important of which includes system

infrastructure growth, account growth, future water rates, future water purchase costs

and increases in expenses. The Financial Plan built on these assumptions conclude

that the City of Vaughan has a financially sustainable drinking water system.

This Financial Plan is a working document and will be reviewed annually to ensure that

the system continues to be financially sustainable and that adjustments are made as

necessary to achieve this objective.

Process for Approval and Submission

The following steps are required in accordance with the requirements of O.Reg 453/07.

1. The Financial Plan must be approved by resolution of Council.

2. A Notice of the availability of the Financial Plan must be advertised.

3. The Financial Plan must be made available, upon request, without charge, to the

members of the public that are served by the water system.

4. The Financial Plan must be made available on the City of Vaughan’s website.


5. A copy of the Financial Plan, along with Council’s resolution must be submitted to

the Ministry of Municipal Affairs and Housing and to the Ministry of the

Environment, Conservation and Parks to comply with the City of Vaughan’s

Drinking Water System Licence requirements.


APPENDIX A

Ontario Regulation 453/07

Requirements for the City of Vaughan Pursuant to Ontario Regulation 453/07

Requirement to prepare financial plans

1. (2) A person who makes an application under subsection 32 (4) of the Act for the

renewal of a municipal drinking water licence shall, before making the application,

prepare and approve financial plans for the system that satisfy the requirements

prescribed under section 3. O. Reg. 453/07, s. 1 (2).

Financial plan requirement; licence renewals

3. (1) For the purposes of clause (b) of the definition of “financial plans” in subsection

30 (1) of the Act, the following requirements are prescribed for financial plans that

are required by subsection 1 (2) or a condition that is included in a municipal

drinking water licence under subsection 1 (3) to satisfy the requirements of this

section:

1. The financial plans must be approved by a resolution that is passed by,

i. the council of the municipality, if the owner of the drinking water system is a

municipality.

2. The financial plans must apply to a period of at least six years.

3. The first year to which the financial plans must apply must be the year

determined in accordance with the following rules:

i. If the financial plans are required by subsection 1 (2), the first year to which

the financial plans must apply must be the year in which the drinking water

system’s existing municipal drinking water licence would otherwise expire.


4. Subject to subsection (2), for each year to which financial plans apply, the

financial plans must include the following:

i. Details of the proposed or projected financial position of the drinking water

system itemized by,

A. total financial assets,

B. total liabilities,

C. net debt,

D. non-financial assets that are tangible capital assets, tangible capital

assets under construction, inventories of supplies and prepaid expenses,

and

E. changes in tangible capital assets that are additions, donations, write

downs and disposals.

ii. Details of the proposed or projected financial operations of the drinking water

system itemized by,

A. total revenues, further itemized by water rates, user charges and other

revenues,

B. total expenses, further itemized by amortization expenses, interest

expenses and other expenses,

C. annual surplus or deficit, and

D. accumulated surplus or deficit.

iii. Details of the drinking water system’s proposed or projected gross cash

receipts and gross cash payments itemized by,

A. operating transactions that are cash received from revenues, cash paid

for operating expenses and finance charges,


B. capital transactions that are proceeds on the sale of tangible capital

assets and cash used to acquire capital assets,

C. investing transactions that are acquisitions and disposal of investments,

D. financing transactions that are proceeds from the issuance of debt and

debt repayments,

E. changes in cash and cash equivalents during the year, and

F. cash and cash equivalents at the beginning and end of the year.

iv. Details of the extent to which the information described in subparagraphs i, ii

and iii relates directly to the replacement of lead service pipes as defined in

section 15.1 – 3 of Schedule 15.1 to Ontario Regulation 170/03 (Drinking

Water Systems), made under the Act.

5. The owner of the drinking water system must,

i. make the financial plans available, on request, to members of the public who

are served by the drinking water system without charge,

ii. make the financial plans available to members of the public without charge

through publication on the Internet, if the owner maintains a website on the

Internet, and

iii. provide notice advising the public of the availability of the financial plans

under subparagraphs i and ii, if applicable, in a manner that, in the opinion of

the owner, will bring notice to the attention of members of the public who are

served by the drinking water system.

6. The owner of the drinking water system must give a copy of the financial

plans to the Ministry of Municipal Affairs and Housing. O. Reg. 453/07, s.

3 (1).


APPENDIX B

As of December 312019

20202021

20222023

20242025

20262027

20282029

20302031

Financial Assets:Cash and cash equivalents

72,320,479

63,542,749

56,775,908

57,909,217

91,355,853

106,522,229

122,053,090

140,020,636

156,589,375

174,347,713

196,850,226

211,852,425

234,739,313

Water billings receivable

12,363,731

13,672,424

14,452,084

14,989,508

15,806,087

16,603,902

17,441,995

18,322,397

19,247,245

20,218,784

21,239,372

22,311,483

23,437,721

Accounts receivable229,573

233,655

237,762

238,017

243,273

249,720

258,451

268,879

279,694

290,899

302,509

314,542

327,001

Total Financial Assets84,913,783

77,448,827

71,465,754

73,136,741

107,405,212

123,375,852

139,753,536

158,611,912

176,116,315

194,857,396

218,392,107

234,478,451

258,504,035

Financial Liabilities:

Accounts payable813,874

828,745

827,985

870,588

888,541

922,149

953,613

985,330

1,020,539

1,056,097

1,092,060

1,131,801

1,172,007

Accrued liabilities

17,311,596

18,641,323

19,501,802

20,196,471

21,705,318

22,714,039

23,769,646

24,874,322

26,030,345

27,240,105

28,506,098

29,830,941

31,217,367

Employee future benefits2,942,563

3,153,474

3,374,931

3,607,461

3,851,617

4,107,982

4,377,164

4,659,805

4,956,579

5,268,191

5,595,384

5,938,936

6,299,666

Deferred revenue - obligatory reserve funds

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

2,926,576

Debenture and other debt18,671,665

18,064,052 17,425,678

16,754,987 16,050,342

15,310,025 14,532,229

13,715,056 12,856,515

Total Liabilities23,994,608

25,550,117

26,631,295

27,601,096

48,043,718

48,734,797

49,452,678

50,201,020

50,984,381

51,800,993

52,652,347

53,543,310

54,472,131

Net Financial Assets60,919,174

51,898,710

44,834,460

45,535,645

59,361,494

74,641,055

90,300,858

108,410,892

125,131,933

143,056,403

165,739,761

180,935,141

204,031,904

Non-Financial Assets:Tangible Capital Assets

338,473,794

365,847,555

392,930,591

412,423,898

418,537,194

424,671,828

432,127,746

439,023,368

449,267,126

460,390,006

468,979,822

487,323,263

500,236,058

Accumulated surplus399,392,968

417,746,265

437,765,051

457,959,544

477,898,688

499,312,883

522,428,604

547,434,260

574,399,059

603,446,409

634,719,583

668,258,404

704,267,962

STATEMENT OF FINANCIAL POSITION


APPENDIX C

20192020

20212022

20232024

20252026

20272028

20292030

2031

RevenuesRate Based

75,034,54982,976,907

87,708,60890,970,189

95,925,945100,767,829

105,854,148111,197,242

116,810,078122,706,276

128,900,142135,406,707

142,241,761Other

1,294,1281,312,702

1,327,8531,079,452

1,101,0411,123,062

1,145,5231,168,434

1,191,8021,215,638

1,239,9511,264,750

1,290,045Contributions from Developers

3,953,2654,032,330

4,112,9774,195,236

4,279,1414,364,724

4,452,0184,541,059

4,631,8804,724,518

4,819,0084,915,388

5,013,696Contributed /Assumed Assets

8,804,7758,980,871

9,160,4889,343,698

9,530,5729,721,183

9,915,60710,113,919

10,316,19810,522,522

10,732,97210,947,631

11,166,584Interest Income

1,341,6001,341,600

1,341,6001,341,600

1,401,6571,535,753

1,817,0432,206,013

2,614,7253,043,254

3,492,5503,963,578

4,456,425Total Revenues

90,428,31798,644,410

103,651,526106,930,176

112,238,357117,512,552

123,184,339129,226,667

135,564,683142,212,207

149,184,622156,498,055

164,168,511

ExpensesW

ater Purchases53,641,334

57,761,59860,427,861

62,580,34767,255,628

70,381,22773,652,110

77,075,03380,657,063

84,405,59788,328,377

92,433,50596,729,457

Maintenance and Installation Cost7,325,683

7,560,5557,509,914

8,044,5248,242,928

8,653,9379,035,209

9,419,3359,850,448

10,285,72210,725,929

11,216,97811,713,750

General Administration4,420,347

4,382,2634,429,679

4,483,2434,537,455

4,592,3224,647,853

4,704,0554,760,937

4,818,5064,876,772

4,935,7424,995,426

Allocated Overhead2,147,403

2,252,7402,272,478

2,259,3112,375,882

2,499,9512,632,065

2,772,8112,922,820

3,082,7733,253,403

3,435,5013,629,916

Debenture Interest0

00

01,016,708

987,430956,669

924,352890,398

854,725817,247

777,871736,501

Future Employee Benefits200,868

210,911221,457

232,530244,156

256,364269,182

282,641296,774

311,612327,193

343,552360,730

Loss of Disposal of TCA953,252

840,540863,584

719,8440

00

00

00

00

Amortization6,657,144

7,282,5067,907,767

8,415,8848,626,456

8,727,1268,875,528

9,042,7849,221,446

9,405,9229,582,528

9,816,0859,993,173

Total Expenses75,346,031

80,291,11383,632,740

86,735,68392,299,212

96,098,357100,068,618

104,221,011108,599,884

113,164,857117,911,449

122,959,234128,158,952

Annual Surplus15,082,286

18,353,29720,018,786

20,194,49319,939,144

21,414,19523,115,721

25,005,65626,964,799

29,047,35031,273,174

33,538,82136,009,559

Accumulated Surplus, beginning of year384,310,682

399,392,968417,746,265

437,765,051457,959,544

477,898,688499,312,883

522,428,604547,434,260

574,399,059603,446,409

634,719,583668,258,404

Accumulated Surplus, end of year399,392,968

417,746,265437,765,051

457,959,544477,898,688

499,312,883522,428,604

547,434,260574,399,059

603,446,409634,719,583

668,258,404704,267,962

STATEMENT OF OPERATIONS


APPENDIX D

As at December 312019

20202021

20222023

20242025

20262027

20282029

20302031

Cash provided by (used in):

Annual surplus15,082,286

18,353,297

20,018,786

20,194,493

19,939,144

21,414,195

23,115,721

25,005,656

26,964,799

29,047,350

31,273,174

33,538,821

36,009,559

Operating activities:Items not involving cash:

Amortization6,657,144

7,282,506

7,907,767

8,415,884

8,626,456

8,727,126

8,875,528

9,042,784

9,221,446

9,405,922

9,582,528

9,816,085

9,993,173

Loss on disposal of tangible capital assets

953,252

840,540

863,584

719,844

-

-

-

-

-

-

-

-

-

Contributed tangible capital assets(8,804,775)

(8,980,871)

(9,160,488)

(9,343,698)

(9,530,572)

(9,721,183)

(9,915,607)

(10,113,919)

(10,316,198)

(10,522,522)

(10,732,972)

(10,947,631)

(11,166,584)

Change in non-cash assets and liabilities

Decrease (increase) in water billings receivable(1,857,148)

(1,308,693)

(779,661)

(537,423)

(816,579)

(797,816)

(838,092)

(880,402)

(924,849)

(971,539)

(1,020,587)

(1,072,112)

(1,126,238)

Decrease (increase) in accounts receivable

(197,960)

(4,082)

(4,107)

(255)

(5,256)

(6,447)

(8,731)

(10,428)

(10,815)

(11,205)

(11,611)

(12,033)

(12,459)

Increase (decrease) in accounts payable266,390

14,871

(759)

42,602

17,954

33,607

31,465

31,716

35,209

35,558

35,963

39,741

40,206

Increase (decrease) in accrued liabilities

4,631,705

1,329,727

860,479

694,669

1,508,847

1,008,720

1,055,608

1,104,675

1,156,024

1,209,760

1,265,994

1,324,842

1,386,427

Increase in employee future benefits174,489

210,911

221,457

232,530

244,156

256,364

269,182

282,641

296,774

311,612

327,193

343,552

360,730

16,905,383

17,738,206

19,927,058

20,418,646

19,984,150

20,914,566

22,585,074

24,462,724

26,422,391

28,504,936

30,719,681

33,031,265

35,484,813

Capital activities:

Cash used to acquire tangible capital assets(30,219,904)

(26,515,937)

(26,693,899)

(19,285,337)

(5,209,180)

(5,140,576)

(6,415,840)

(5,824,487)

(9,149,006)

(10,006,281)

(7,439,372)

(17,211,894)

(11,739,384)

Financing activities:

Debenture and other debt incurred/(repaid)-

-

-

-

18,671,665

(607,613)

(638,374)

(670,691)

(704,645)

(740,318)

(777,796)

(817,172)

(858,541)

Increase (decrease) in Cash and Cash Equivalents(13,314,521)

(8,777,730)

(6,766,841)

1,133,309

33,446,636

15,166,377

15,530,861

17,967,546

16,568,739

17,758,337

22,502,513

15,002,199

22,886,888

Cash and Cash Equivalents, beginning of year85,635,000

72,320,479

63,542,749

56,775,908

57,909,217

91,355,853

106,522,229

122,053,090

140,020,636

156,589,375

174,347,713

196,850,226

211,852,425

Cash and Cash Equivalents, end of year72,320,479

63,542,749

56,775,908

57,909,217

91,355,853

106,522,229

122,053,090

140,020,636

156,589,375

174,347,713

196,850,226

211,852,425

234,739,313

STATEMENT OF CASH FLOW


APPENDIX E

As at December 312019

20202021

20222023

20242025

20262027

20282029

20302031

Annual Surplus/(Deficit)15,082,286

18,353,297

20,018,786

20,194,493

19,939,144

21,414,195

23,115,721

25,005,656

26,964,799

29,047,350

31,273,174

33,538,821

36,009,559

Amortization of tangible capital assets6,657,144

7,282,506

7,907,767

8,415,884

8,626,456

8,727,126

8,875,528

9,042,784

9,221,446

9,405,922

9,582,528

9,816,085

9,993,173

Loss on disposal of tangible capital assets

953,252840,540

863,584719,844

00

00

00

00

0Acquisition of tangible capital assets

(39,024,679)

(35,496,808)

(35,854,388)

(28,629,035)

(14,739,752)

(14,861,759)

(16,331,447)

(15,938,406)

(19,465,204)

(20,528,802)

(18,172,344)

(28,159,526)

(22,905,968)

Increase (decrease) in net financial assets(16,331,997)

(9,020,465)

(7,064,250)

701,186

13,825,849

15,279,561

15,659,803

18,110,034

16,721,041

17,924,469

22,683,358

15,195,380

23,096,763

Net financial assets, beginning of the year77,251,171

60,919,174

51,898,710

44,834,460

45,535,645

59,361,494

74,641,055

90,300,858

108,410,892

125,131,933

143,056,403

165,739,761

180,935,141

Net Financial Assets, end of the year60,919,174

51,898,710

44,834,460

45,535,645

59,361,494

74,641,055

90,300,858

108,410,892

125,131,933

143,056,403

165,739,761

180,935,141

204,031,904

STATEMENT OF CHANGE IN NET FINANCIAL ASSETS



TITLE: SUMMARY OF LEASE AND LICENCE AGREEMENTS

OPERATING IN CITY OWNED FACILITIES



Purpose To provide a report on long-term contracts and leases that the City of Vaughan has with

profit and non-profit organizations.

Recommendations 1. THAT this list of Leases and Licenses be received by Council for informational

purposes only.

Report Highlights The City has 89 properties including community centres, heritage homes, fire

stations, libraries and parks buildings.

There are several processes utilized to arrange for the uses including license

agreements, leases and rental contracts.

Many organizations use City facilities to coordinate their programs and meet

their administrative needs.

Agreements for use of City space listing of all current long-term contracts and

leases with profit and non-profit organizations including operational and

financial obligations is attached.

A review of the processes for leasing is being undertaken in 2019 to

standardize and have consistent guiding principles and terms.

Background

At the Finance, Administration and Audit Committee meeting of April 1, 2019 Council

directed staff to report back with a list of all contracts and leases that the City of

Vaughan has with profit and non-profit organizations, excluding short-term rentals.

The list is comprised of groups who lease or license space in City owned facilities and

excludes:

Shared space lease agreements (EMS/School Board);

Lease agreements for cell towers and storage; and,

Short-term rental contracts.

The City has 89 properties including community centres, heritage homes, fire stations,

libraries and parks buildings. The current practice is to present all lease or license

space arrangements in City owned facilities for Council approval and enact the

necessary by-laws required by the City. In consultation with Legal Services, Real

Estate and Finance, the attached list of leases and licenses have all come forth for

Council approval and all terms and conditions approved prior to entering into an

agreement with the various groups.

Facility Services is currently in the process of developing a leasing framework to

standardize the licensing process and establish consistent guiding principles and terms.


None


The City currently offers a variety of options for use of City space which includes hourly

permitting, short term permitting and seasonal use. For the purpose of this report we

included agreements with a long-term Lease or License Agreements in place.

A review of is being conducted to develop a leasing framework to standardize the

licensing process and establish consistent guiding principles and terms.

Financial Impact

There is no financial impact as a result of this report


There are no implications to the Region or to other levels of government as a result of

this report.

Conclusion

Provide Council for review a consolidated list of all Lease and License agreements

currently operating in City owned facilities.

For more information, please contact: Dave Merriman, Director, Facility Services, ext.

8296.

Attachments

1. Summary of Leased and Licensed Facilities owned by the City, April 24, 2019

Prepared by

Leena Kapadia, Supervisor Contract and Leases, ext. 8894

Group Location Agreement Type

Initial Start Date Renewal Term Terms of Agreement *

Canadian Confederation of Clubs & Associations Laziali

Not-for-profit organization

Used for meetings & social events

10401 Dufferin Street, Maple, ON L6A 1S9 (MNR Lands)

License 15-Jan-03 Month to Month

Tenant:- $1.00 per annum- payment for all utility costs- $562 plus HST per month for maintenance

City:- repairs & defects in the structure- annual reconciliation for utility costs- interior & exterior monthly maintenanance inspections - interior & exterior capital improvements

Cultural & Educational Centre of the Minime Sisters of The Passion


Used as a residence*

7543 Kipling Avenue, Vaughan, ONL4L 1Y5

License 6-Oct-88 30-Mar-35 Tenant:- $2.00 per annum - payment for all operating costs- financial reports to be filed with the Province & the City

City:- leasing from Province & sub-leasing to Cultural & Educational Centre of the Minime Sisters of the Passion

* currently vacant, discussions for next steps to take placeDANI - Developing & Nurturing Independence

Not-for- profit organization

Deliver programs & activities for participants with special needs

Garnet A. Williams CC 501 Clark Avenue West, Thornhill, ONL4J 4E5

Occupies approx. 8,200 sq. ft of space adjacent to GAWCC

RFP12-234Lease of Space

1-Sep-12 Option Term 1: 2017-2022

Option Term 2: 2022-2027

Tenant:- $81,146/year (+ inflation)- payment for all utility costs- maintains, repairs & pays for interior & playground- pays for turf maintenace & snow removal

City:- annual reconciliation for all utility costs- interior & exterior monthly maintenance inspections- interior & exterior capital improvements

Filipino-Canadian Association of Vaughan


Used for offices, meetings & community events

Patricia Kemp CC7894 Dufferin Street, Concord, ONL4K 1R6

Lease 1-Nov-12 31-Oct-32 Tenant:- $1.00 per annum- payment for all operating costs - ensures the demised space is being maintained- monthly HVAC & mechanical system inspections - sub-leases to Glen Sheild Soccer Club & Philippine Heritage Band

City:- maintains & repairs exterior of the facility- interior & exterior capital improvements

Gallanough Resource Library

Public Library

Used as a library for maintaining a collection of materials which includes books, periodicals, newspapers, videotapes & audio recordings

1 Brooke Street,Thornhill, ON L4J 2K7

60% occupancy by library

License & Mgmt Agmt.

8-Jul-99 Library Agmt - Auto renews every 5 years.

City: - maintenance, repairs, cleaning & operating costs- $45,000 paid per annum to Library for support staff- interior & exterior monthly maintenance inspections- interior & exterior capital improvements

Gallanough Library has a Month to Month Lease Agreement with Northwood Academy that operates as a daycare.

Golf North Properties Inc.

Operates and manages the Uplands Golf & Ski Centre

Uplands Golf & Ski Centre46 Uplands Avenue, Thornhill, ONL4J 1K2

RFP 17-079 1-Nov-17 Option Term 1: 2037-2042

Tenant:- minimum rent = $75K/yr which goes towards capital improvement reserve- variable rent = 10% of gross revenues less minimum rent- capital repair & replacement - payment for utility & maintenance costs

City:- water supply, major tree pruning/tree preservation & woodlot management- oversight of electrical volt- full capital facility audits every five years (colead by City & Tenant)

April 24, 2019

Summary of Leased & Licensed Facilities owned by the City



Hospice Vaughan


Used as centre that provides compassionate support to those in our community

Piazza House31 Woodbridge Ave, Woodbridge, ONL4L 2S6

License 1-Nov-01 Month to Month

Tenant:- $1.00 per annum - payment for all utility & cleaning costs- $1,075 plus HST per month for utility & cleaning costs

City:- interior & exterior maintenance & repairs - repairs & defects in the structure- annual reconciliation for utility & cleaning costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

Human Endeavour


Used for offices, meeting rooms & program space

Michael Cranney House439 Glenkindie Ave. Maple, ONL6A 2A2

Human Endeavour occupies 80% of facility.

Lease 1-May-15 Month to Month

Tenant:- $2.00 per annum- payment for all utility & maintenance costs- $1,200 plus HST per month

City:- annual reconciliation for utility & maintenance costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

Kleinburg Nobleton Soccer club


Used as administrative offices

Kleinburg Railway Scout House 10415 Islington Ave, Kleinburg, ON L0J 1C0

License 1-Jul-03 Month to Month

Tenant:- $2.00 per annum- payment for utility, maintenance & cleaning costs- $858.40 plus HST per month

City:- repairs & defects in the structure- annual reconciliation for utility, maintenance & cleaning costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

Mentana Group

Operates & manages the Sports Village Complex

The Sports Village Complex2600 Rutherford Road, Maple, ON L4K 5R1

Land Lease 1-Jul-99 30-Jun-40 Tenant:- payment for full operating costs (including staff, repairs & maintenance, capital repairs, etc)- pay the City a variable rent based on 80% of the available cash (approximately the cumulative income from the previous period audited financial statement)

City:- Guarantor for the project financial arrangement, stemming from the construction of the Complex- construction loan of $9.76M forgivable at end of 40 year term provided that various agreements related to the complex are adhered to- funds 90% of any approved requirements resulted from operating deficits recouped from future income- purchases 5,440 hours of ice annually & sells ice time to minor sports organizations- Working Committee between City & Tenant

Ontario Soccer


Operates & manages the Soccer Centre

The Soccer Centre7601 Martin Grove Rd, Woodbridge, ONL4L 9E4

Lease 20-Jun-96 20-Jun-39 Tenant:- $1.00 per annum - construct, operate, manage & maintains the indoor facility- maintain the whole of the subject lands in good order - pay 5% of the gross revenues from food & beverage sales per annum after capital debt is retired

City:- City representation on their Board

Phillippine Heritage Band


Used for offices, meeting rooms & band practice

Baker Homestead House 91 Thornhill Woods Dr., Thornhill, ON L4J 8R5

40% occupancy of facility

License 1-Nov-01 31-Oct-21 Tenant:- $1.00 per annum - payment for utility & cleaning costs- $2,100 per annum

City:- repairs & defects in the structure- annual reconciliation of utility & cleaning costs- interior & exterior monthly maintenance inspections- interior & exterior capital improvements



Shining Through Centre for Children with Autism


Operates a centre for children with Autism

Tushingham House7365 Martingrove Rd. Woodbridge, ON L4L 9K1

License 1-Jun-02 20-Jun-39 Tenant:- $1.00 per annum- keep, operate & maintain the subject lands, buildings & structures - relocated the heritage house at it's expense- payment for all operating costs - building becomes asset of City at the end of the lease

The Society for the Preservation of Historic Thornhill


Used for offices, storage & archiving

Armstrong House42 Old Yonge St.Thornhill, ONL4J8C5

Occupies ~30% of facility.

Lease 1-Jun-11 Month to Month

Tenant:- $350.00 per month

City:- interior & exterior maintenance & repairs - repairs & defects in the structure- monthly maintenanance inspections- interior & exterior capital improvements

Thornhill Park Tennis Club


Used as administration office & changerooms for members

26A Old Yonge St.Thornhill, ON L4J 1W3

License & Rental Contracts

15-Apr-10 14-Apr-20 Tenant:- $2,998.40 annually - $6,000 for the "annual contribution cost" to maintain asphalt on tennis courts- payment for all utilty & cleaning costs

City: - water, garbage removal- monitoring fire alarm- annual reconciliation of utility & cleaning costs- monthly maintenanance inspections- interior & exterior capital improvements

Upper Canada Childcare Centre Not-for-profit organization

Operates the child care centre at NTCC

North Thornhill CC300 Pleasant Ridge Ave Thornhill, ONL4J 9B3

Occupies 4,046 sq. ft of space located inside NTCC.

RFP09-140

Lease of Space for Operations of a Child Care Centre

6-Sep-10 Option Term 1: 2015-2020


Tenant:- $75,869/year (+inflation)- maintains, repairs & pays for interior & playground- payment for utility costs

City:- maintains & repairs the exterior & structural components of the facility- annual reconciliation of utility costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

Vaughan Soccer Club Inc


Used as administrative offices

Devlin House 11151 Keele St Maple, Ontario L6A 1S8

License 1-Nov-06 Month to Month

Tenant:- $2.00 per annum- payment for all utility, maintenance & cleaning costs- $1,393.80 plus HST per month

City:- interior & exterior maintenance & repairs - repairs & defects in the structure- annual reconciliation for utility, maintenance & cleaning costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

Veneto Clubs of Ontario


Operates the premises for public, social & recreational uses.

7465 Kipling Ave,Woodbridge, ON L4L 1Y5

License 1-Apr-85 31-Mar-35 Tenant:- $2.00 per annum- payment for all operating costs- maintain the land & all structures on the property- Veneto subleases to Meta Centre

City:- leasing from Province & sub-leasing to Veneto Clubs of Ontario

Villa Giardino Homes Ltd.

Uses parking lot

7371 Martin Grove Rd, Woodbridge, ONL4L 9N2

Land Lease 1-Jan-99 30-Jun-39 Tenant:- $1.00 per annum- has overflow parking privileges on the property- payment for maintenance of the parking lot



Woodbridge Soccer Club


Used as administrative offices & changerooms

Vaughan Grove Building 7401 Martingrove Rd., Woodbridge ONL4L 9E4

License 1-May-01 Month to Month -currently in discusssions

Tenant:- $1.00 per annum - payment for utility & cleaning costs -$1,676.59 plus HST per month (subject to change pending imminent discussion on cleaning requirements)

City:- interior & exterior maintenance & repairs - annual reconciliation for utility & cleaning costs- repairs & defects in the structure- monthly maintenanance inspections- interior & exterior capital improvements

YMCA


Operates the child care facility at Vaughan City Hall

Vaughan City Hall 2141 Major Mackenzie Dr. Vaughan, ON L6A 1T1

Occupies 5,605 sq. ft. of space located in the basement of City Hall

RFP13-017

Lease of Space for Operations of a Child Care Centre

1-Sep-13 Option Term 1: 2018-2023


Tenant:- $88,184.31/yr (+inflation)- maintains, repairs & pays for the interior including the playground- payment for all utilities

City:- maintains & repairs the exterior and structural components of the facility- annual reconciliation for all utility costs- interior & exterior monthly maintenanance inspections- interior & exterior capital improvements

List includes:

List excludes:

* These are high level terms of agreement and are not intended to reflect all details

- Shared space lease agreements (EMS/School Board)

- Short term rental contracts- Agreements for cell towers, storage

- Groups who Lease or License space in City owned facilities



TITLE: CAPITAL BUDGET AMENDMENT FOR FL-5411-18 -

REPLACEMENT FORESTRY BUCKET TRUCK WITH CHIPPER

BODY; AND, FL-5215-19 - PKS-ADDITIONAL 2 TON 4X4 CREW

CAB DUMP TRUCK

FROM: Zoran Postic, Interim Deputy City Manager, Public Works

ACTION: DECISION

Purpose The purpose of this report is to seek approval to increase the capital project budget for

FL-5411-18 for the replacement of one (1) Forestry Bucket Truck with a Chipper Body;

and FL-5215-19 for the purchase of a Parks and Roads Operations 2-ton dump truck.

Recommendations 1. That the approved budget in Capital Project FL-5411-18 - PKS-FORESTRY-

Replace Unit #1519 with Bucket chipper truck, be increased by $46,000 inclusive of applicable taxes and administration recovery and funded from the Vehicle Replacement Reserve;

2. That the approved budget in Capital Project FL-5215-19 - PKS-Additional 2 ton

4x4 crew cab dump truck be increased by $55,000 inclusive of applicable taxes and administration recovery, funded 90% from City-Wide DC Public Works/Fleet Reserve and 10% from the Capital from Taxation Reserve; and

3. That inclusion of this matter on a Public Committee or Council agenda with respect to amending the capital budget as identified above be deemed sufficient notice pursuant to Section 2(1)(c) of By-Law 394-2002, as amended.

Background

Capital project FL-5411-18 funds the procurement of a bucket truck with a chipper body that will support the delivery of forestry services by City staff.

The bid response received for this equipment exceeds the available budget for the project. The budget amendment would provide sufficient funds in the project to award the contract for the replacement of one unit that has reached the end of its service life. It will also allow sufficient funding for additional equipment on the vehicle that would automate critical field maintenance, improve hydraulic equipment cold weather performance and protection, and enable supply and installation of a larger working bucket more closely matching the size of bucket in the unit to be replaced.

Capital project FL-5215-19 - PKS-Additional 2 ton 4x4 crew cab dump truck funds the procurement of one 2-ton 4x4 crew cab dump truck. The unit will be used to support growth related road and park maintenance, as well as snow operations through the winter season. In accordance with the City’s procurement procedures, a budget amendment is being sought at this stage of the procurement process to ensure sufficient funding is available for the unit.


N/A


The cost for the forestry bucket truck has increased in part due to steel and aluminum tariffs, as well as the addition of beneficial provisional items. The Request for Tender for this unit was issued in Q1 2019 and was executed in compliance with the Corporate Procurement Policy assuring that award of the tender within the amended budget will represent good value to the City for this necessary equipment. The tender also informed that the following additional equipment is available:

An automated field equipment lubrication system that will reduce productive time

Report Highlights Capital Project FL-5411-18 is insufficiently budgeted to award a tender for the

replacement of one (1) forestry bucket truck with a chipper body.

The City has received new information indicating that the current approved

budget for capital project FL-5215-19 is insufficiently budgeted to tender the

purchase of one (1) 2-ton 4x4 crew cab dump truck

loss for this function, as well as likely both reducing equipment downtime, and increasing life expectancy of the asset;

Uprated hydraulic fluid that provides improved wear protection, water separation and foam resistance in cold weather use; and,

A larger aerial bucket, more closely matching the size of the bucket installed on the unit to be replaced.

The bid response received for the tender for this equipment exceeds the available budget for this project. It is believed that increases in steel and aluminum tariffs were principal drivers for the price increase above the project estimates. Selected additional maintenance equipment further increases the cost for this equipment beyond the available budget for this project.

A budget amendment is being sought for FL-5411-18 to provide sufficient funds to award this tender.

An alternative to the budget amendment for the bucket truck with chipper body is to reduce cost by altering the specifications of the unit and foregoing the addition of the provisional field maintenance equipment, uprated hydraulic fluid, and larger aerial bucket. However, doing so would reduce the performance, flexibility, and utility of the unit, as well as potentially negatively impacting unit reliability, service delivery efficiency, and productivity. Further, the activity of re-specification would require the re-issuance of the Request for Tender and would delay the delivery of the unit.

A recent vendor inquiry has informed that the budget for FL-5215-19 is insufficient to tender the purchase of a 2-ton 4x4 crew cab dump truck. A budget amendment is being sought to provide sufficient funds to tender a 2-ton 4x4 crew cab dump truck. If approved, the Request for Tender for the unit will be executed in compliance with the Corporate Procurement Policy assuring that the award within the amended budget represents good value to the City for this necessary equipment. No adjustments can be made to the unit specification to tender it within the current approved project budget. One alternative to the budget amendment is to not procure this unit. Not having this unit will impact the City’s ability to maintain service levels as the City grows.

Financial Impact

A capital budget amendment is required to project FL-5411-18 to enable the award of the tender for the equipment.

The recommended capital budget increase of $46,000 is inclusive of applicable taxes and administration recovery and would be funded from the Vehicle Replacement

Reserve. Any residual funds would be returned to the original funding source.

The additional funds required in the project is summarized in the table below.

Table 1: Capital Budget Amendment Summary

FL-5411-18

FORESTRY BUCKET TRUCK WITH CHIPPER BODY

Total Estimated Costs (including HST and 3% Administration Recovery) $337,550

Approved Budget $297,670

Less: Actual Costs & Commitments ($5,384)

Budget Available $292,286

Budget Amendment Required (rounded to the nearest Thousand) $46,000

A capital budget amendment of $55,000 is required to increase the budget of FL-5215-19 sufficiently to enable the tendering of a 2-ton 4x4 crew cab dump truck.

The recommended capital budget increase is inclusive of applicable taxes and administration recovery and would be funded 90% from the City-Wide DC Public Works/Fleet Reserve and 10% from the Capital from Taxation Reserve. Any residual funds would be returned to the original funding source.

The additional funds required is summarized in the table below.

Table 2: Capital Budget Amendment Summary

FL-5215-19

PKS-Additional 2 ton 4x4 crew cab dump truck

Total Estimated Costs (including HST and 3% Administration Recovery) $135,000

Approved Budget $80,000

Less: Actual Costs & Commitments $0

Budget Available $80,000

Budget Amendment Required (rounded to the nearest Thousand) $55,000


There are no regional implications from the recommendations of this report.

Conclusion

Staff recommends that:

An increase to the approved budget in Capital Project FL-5411-18 be approved to ensure sufficient funds are available to award the tender contract for this equipment and selected provisional items; and,

An increase to the approved budget in Capital Project FL-5215-19 be approved to ensure sufficient funds are available to move forward with a tender for this equipment.

For more information, please contact: Donald Eta, Director, Fleet Management Services.

Attachments There are no additional attachments for this report.

Prepared by

Donald Eta, Director, Fleet Management Services, ext. 6141.

MEMBER’S RESOLUTION

Meeting/Date FINANCE, ADMINISTRATION AND AUDIT COMMITTEE - MAY 6, 2019

Title: MAYOR MAURIZIO BEVILACQUA’S 2018-2022 TERM OF COUNCIL PRIORITY TASK FORCES

Submitted by: Mayor Maurizio Bevilacqua

Whereas, the following priorities were identified during the 2018 Inauguration address: diversity and citizen engagement; economic prosperity, investment and social capital; environmental leadership; governance; hospital precinct; older adult; Smart City; affordable housing and growth; and transportation and infrastructure. Whereas, the Mayor committed to the creation of task forces during this Term of Council to address these specific policy issues and city-building more generally. Whereas, the Mayor’s task forces will provide Council with evidence-informed and action-oriented recommendations that will further Council’s ongoing commitment to safeguard and elevate the quality of life for all citizens. Whereas, the mandate of each task force will be established by a terms of reference and each task force will include a Member of Council as Chair and as Vice-Chair. Whereas, the task forces will conduct their work over a maximum of an 18-month duration and provide a full report of findings and recommendations to a future Committee at the completion of the task force’s mandate. Whereas, task force representation will come from a cross-section of citizens, businesses, stakeholders and sector/industry experts. Whereas, each task force will be provided with two senior staff in addition to one member of the Office of the City Clerk and one member of Corporate and Strategic Communications to support the work of the task force. Whereas each Chair will work with staff to complete detailed project plans and deliverables once the task forces are established. Whereas, three of the task forces will begin their mandates in September 2019. These task forces include Transportation and Infrastructure, Smart City, and Governance. It is therefore recommended: 1. That the following Members of Council be appointed to the following task forces:

(a) Transportation and Infrastructure Task Force: Chair, Ward 3 Councillor Rosanna DeFrancesca, and Vice-Chair, Reg. Councillor Gino Rosati (b) Governance Task Force: Chair, Ward 2 Councillor Tony Carella, and Vice-Chair, Ward 5 Councillor Alan Shefman (c) Smart City Task Force: Chair, Mayor Maurizio Bevilacqua, and Vice-Chair, Ward 4 Councillor Sandra Yeung Racco

2. That the City Manager identify the appropriate staff representation for each task force and that staff meet with the Chair and Vice-Chair at their earliest convenience to commence work. 3. That the City Clerk be requested to work with each task force to prepare terms of reference and commence recruitment pursuant to the membership and selection criteria identified by the Chair and appropriate staff as part of the development of the terms of reference of the task force.

Respectfully submitted, Mayor Maurizio Bevilacqua

Finance, Administration and Audit Committee


TITLE: COUNCIL STAFF RELATIONS POLICY

FROM: Nick Spensieri, Deputy City Manager, Corporate Services

ACTION: DECISION

Purpose The purpose of this report is to ensure compliance with new legislated requirements

prescribing that as of March 1, 2019 all municipalities in Ontario must develop a Council

Staff Relations Policy.

Recommendations

1. That the attached Staff Council Relations Policy, as substantially set out in

Attachment 1 be approved.

Report Highlights Ontario legislation requires municipalities to develop and implement a Council

Staff Relations Policy as of March 1, 2019

Staff have consulted with members of Council, Staff and have reviewed

academic literature in the development of the Policy.

Additional input received from members of Council at the April 1, 2019 FA&A

meeting has been incorporated in the attached revised draft.

Background

Staff presented the attached draft Council Staff Relations Policy at the April 1, 2019

Finance Administration and Audit Committee meeting. Staff considered the comments

expressed by individual members of Council at the last committee meeting and

incorporated changes in the wording as attached. The attached revised draft policy has

been further discussed with each member of Council to ensure that Staff captured the

essence of their comments.

As of March 1, 2019, municipalities are required to adopt a policy on the relationship

between members of council and municipal staff. Municipalities have the flexibility to

determine the content of these policies.

The relationship between council and staff is a vital component of an effective municipal

government. Staff and council rely on one another to move the municipality

forward. Both staff and council provide leadership; council provides political leadership,

while staff provide leadership in implementing council decisions.

The relationship between staff and council is intertwined and it is important for council

members and staff to respect one another’s roles so that they can serve the public in an

effective and efficient manner.

Earlier this year Staff retained the services of an independent consultant to solicit input

from each member of Council on the development of this policy. In addition, this topic

was discussed with council as part of the agenda at the February 2019, Council

Education session.

The attached draft policy has been developed based on all feedback gathered from

individual members of council, feedback from the Council Education Session, input from

senior administrative staff and leading practice based on academic research. The

specific principles outlined in the policy were identified in an academic research paper

by Political Science Professor David Siegel and former Chief Administrative Officer

Michael Fenn.

Staff will consult with council members and with senior leaders of the administration to

develop a comprehensive guide that will support the implementation of this policy

including training of staff and orienting new members of council.

Financial Impact

There is no financial impact associated with the approval and implementation of these

policies outside the existing approved operating budget.


There are no regional impacts associated with these policies.

Conclusion

Following the additional comments and consultation with members of Council and with

Staff the attached Council Staff Relations policy has been further revised to address the

legislative requirements and provide a standard by which the Council and Staff will

continue to work collaboratively to serve Vaughan citizens. This principled based policy

identifies how complaints can be addressed to ensure adherence to the standard.

Attachments

1. Council Staff Relations Policy, May 6, 2019

Prepared by

Demetre Rigakos, Chief Human Resources Officer, extension 8297.

CITY OF VAUGHAN CORPORATE POLICY

POLICY TITLE: COUNCIL-STAFF RELATIONS POLICY NO.: 13.C.04

Section: Human Resources

Effective Date:

May 14, 2019 Date of Last Review:

May 6, 2019

Approval Authority: Policy Owner:

Council City Manager

POLICY STATEMENT

The City of Vaughan, guided by its values of Respect, Accountability and Dedication, will promote an environment of mutual respect and trust and will support sound decision making based on knowledge, areas of expertise and sound judgment. Members of Council and Staff shall demonstrate leadership, commit to a high-degree of confidentiality, support and enhance public education about the political and decision-making processes and will refrain from publicly criticizing Members of Council, Staff or any decision of the Corporation. For clarity this does not prevent a Member of Council from stating their views on a particular issue. The intent is to show respect for the decisions of the Corporation once the debate has concluded.

PURPOSE

The purpose of this policy is to ensure that the relationship between Members of Council and Staff of the Corporation is co-operative, supportive and positive with a clear understanding of the respective roles and responsibilities.

SCOPE

This policy applies to all Staff, Officers and Members of Council in their interactions with Staff, volunteers, consultants and contractors that work on behalf of the Corporation. This policy applies to all interactions, including on-site and off-site of City facilities, before, during and after work hours.

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LEGISLATIVE REQUIREMENTS

Section 270 (1) of the Municipal Act, 2001 as amended, requires City Council to adopt and maintain a policy with respect to the relationship between Members of Council and the Staff of the Corporation. The effective date of this requirement is March 1, 2019.

DEFINITIONS

1. “Members(s) of Council” means a member or members of the municipal

council of the Corporation of the City Vaughan.

2. “Corporation” refers exclusively to the City of Vaughan.

3. “Officer(s) means a person who holds a position of responsibility with definite rights and duties by statute or by-law.

4. “Staff” means any of the following: a. A person, not including Members of Council, who performs work for the

Corporation for wages; b. A person who supplies services to the Corporation for wages; c. Such other persons as may be prescribed who perform work or supply

services to the Corporation for no monetary compensation. 5. “Senior Management” means a staff member who is either a department head

or holds the title of Director, Chief, Deputy City Manager and or City Manager

6. “Code of Ethical Conduct for Members of Council”: Establishes rules that guide Members of Council in performing their diverse roles in representing their constituents and recognize Members’ accountability for managing City resources allocated to them. Is a written Code of Ethical Conduct to protect the public interest and helps to ensure that the Members of Council share a common basis for acceptable conduct. These standards are designed to provide a reference guide and a supplement to the legislative parameters within which the members must operate.

7. “Employee Code of Conduct”: Establishes that City employees must follow standards of ethical and professional behavior in the course of their work to ensure that public confidence and trust is maintained. This code establishes standards designed to promote and protect the public interest through honest and ethical conduct which enhances public confidence and trust in the integrity, objectivity and impartiality of the City.

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POLICY

Clarifying Roles

I. Role of Council

Policy focus: Represent the Corporation, provide direction and create policy. Specifically, Section 224 of the Municipal Act, 2001 states: 224. It is the role of council,

a) to represent the public and to consider the well-being and interests of the municipality;

b) to develop and evaluate the policies and programs of the municipality; c) to determine which services the municipality provides; d) to ensure that administrative policies, practices and procedures and

controllership policies, practices and procedures are in place to implement the decisions of council;

d.1) to ensure the accountability and transparency of the operations of the municipality, including the activities of the senior management of the municipality; e) to maintain the financial integrity of the municipality; and f) to carry out the duties of council under this or any other Act.

I. Role of Head of Council (Mayor)

Section 225 of the Municipal Act, 2001 defines the role of the Mayor as follows: 225. It is the role of the head of council,

a) to act as chief executive officer of the municipality; b) to preside over council meetings so that its business can be carried out

efficiently and effectively; c) to provide leadership to the council; c.1) without limiting clause (c), to provide information and recommendations to

the council with respect to the role of council described in clauses 224 (d) and (d.1);

d) to represent the municipality at official functions; and e) to carry out the duties of the head of council under this or any other Act.

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Section 226.1 sets out special responsibilities of the chief executive officer which include:

a) uphold and promote the purposes of the municipality; b) promote public involvement in the municipality’s activities; c) act as the representative of the municipality both within and outside the

municipality, and promote the municipality locally, nationally and internationally; and

d) participate in and foster activities that enhance the economic, social and environmental well-being of the municipality and its residents.

The head of council has a prominent and very public profile. Many citizens within the City of Vaughan will have high and often varied expectations for the head of council. The head of council must find a way to balance these expectations and special responsibilities. Municipal decisions, however, are made by council as a whole. The head of council does not have any more power than any other member of council to make decisions on behalf of the municipality. Each member of council only has one vote.

II. Role of the City Manager Direction Focus: The City Manager leads in three dimensions. Up to Council, down to staff and out to the community stakeholders. The City Manager is responsible for providing professional advice to Council and leading staff in the implementation of Council’s direction / policies. The City Manager specific responsibilities are outlined in the City Manager’s By-Law 012-2013.

III. Role of Senior Management:

Direction Focus: Act as the liaison between Council and Staff, direct implementation of Council’s policies, hire and develop a team of competent Staff.

IV. Role of Staff and Other Officers:

Implementation Focus: Research policy and programs give best professional advice, implement decisions of Council, fulfill statutory duties, follow direction of City Manager generally see to the operation of the Corporation.

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Guiding Principles

“Council should give the City Manager clear and unequivocal responsibility and accountability for the overall management of the administration of the City. Not doing so undermines the City Manager’s effectiveness…”

“Although the Mayor can properly be involved in hiring the City Manager, there should be a clear division of responsibility between the Mayor and the office of the City Manager – a separation of the political from the administrative…”

Madam Justice Denise Bellamy,

Toronto External Contracts Inquiry, 2005, p. 424

I. Respect

Members of Council, Staff and Officers shall at foster a climate of mutual respect. Each must be respectful of each others’ intelligence and professional duties. Members of Council, Staff and Officers must understand that they all face different, often unique, challenges and recognize their overarching goal is to serve the best interests of the Municipality.

II. Professionalism

Members of Council, Staff and Officers commit to treat each other with professionalism. When Council requests that Staff and Officers appear before Council, they must comply and be prepared for any questions Council has. Advance notice of questions to Staff provides an opportunity for Staff to provide quality reports and advice.

III. A Formal Relationship

Staff and Officers shall treat Council as a collective decision-making body. Staff and Officers shall not communicate directly with individual Members on municipal business, rather they must communicate on such matters through the City Manager or appropriate Senior Management Member as designated through the City Manager. Information from the City Manager shall be communicated to all Members. Staff and Officers shall stay out of political lobbying. To ensure clarity this will be further defined in an implementation procedure that will replace the former Staff Protocol for responding to members of Council.

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IV. Politics or Management – Not Both

Council provides direction, Staff and Officers give professional advice and implement Council’s directives. Members of Council are not elected to be technical experts nor to act in their professional capacities. Likewise, Staff and Officers are not politicians. Advice comes from Staff, policy and service delivery decisions are made by Council.

V. Respect Staff

Members of Council are to avoid the temptation to play up divisions or conflicts. Staff and Officers shall not be targets of derisive/vexatious comments/behaviour/conduct. The public expects Members to do the job that they have been elected to do. The public expects Staff and Officers to do the job that they have been hired to do. Comments on Staff and Officer performance shall be directed through the appropriate confidential performance reviews. As per the commentary in rule 16 of the Code of Ethical Conduct for Members of

Council an individual member should not request staff to undertake extensive work or prepare lengthy reports, other than pursuant to a Council direction.

Members should be discouraged from asking for reports as a means of getting past an unhappy public delegation.

VI. Represent the Whole Community

Members, together with the Municipality’s Staff and Officers, work for the public good. Decision making by Members should be based on complete information and unbiased recommendations from Staff and Officers. Members should, in addition to such information and recommendations, rely on their own judgment and show leadership in their decision making.

VII. Effective Use of Council Time Staff should be mindful and make good use of Council time. As an example, Staff should keep presentations concise and succinct and enable Council to make informed decisions. Sufficient time should be allocated to debate various issues.

VIII. Respect the Chain of Command

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Members of Council acknowledge they have no individual capacity to direct Staff to perform, or not perform functions or duties. The City Manager is responsible for Staff and Officers - Members of Council who need to engage with Staff and Officers must do so through the City Manager or Senior Staff. This would include both in person, verbal, written and electronic messages. Routine questions from a member of Council or access to information that is readily available to a member of the public can be provided by any knowledgeable staff member the same way we serve all citizens. T

IX. All Members of Council are Equal

Staff are expected to show respect and professionalism and treat all Members of Council equally.

X. Members of Council are Elected Representatives, not Staff and Officers.

Once a matter is proposed or decided, Staff should only comment on matters of fact or history in discussing issues with the public and the media and should comply with the Corporate and Strategic Communications Press Releases policy. Dealing with the media is generally part of an elected representative’s job.

Complaints

The City Clerk will be responsible for receiving complaints and or concerns related to this Policy. Upon receipt of a complaint and or concern, the Clerk shall notify:

a) In the case of a Staff and Officers other than the City Manager or Clerk, the City Manager

b) In the case of the City Manager or Clerk, Council or c) In the case of a Member of Council, the Integrity Commissioner

ADMINISTRATION

Administered by the Office of the City Clerk.

Review

Schedule:

Other (specify)

Yearly

Next Review Date: February 1, 2022

Related

Policy(ies):

13.C.02 – Delegation of Powers & Duties Policy

13.C.01 – Respectful Workplace Policy

13.C03 – Workplace Violence Policy

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CC-005 – Social Media Policy

CL-011 – Code of Ethical Conduct for Members of Council

Related

By-Law(s): 012-2013 – Roles and Responsibilities of the City Manager

Procedural

Document:

Revision History

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